Where's our tax cut?

March 02, 1997


Staff Writer

ANNAPOLIS - There was a time when an income tax cut was the surest bet in the General Assembly this year and the only thing left to decide was how it would be paid for - through budget cuts or other taxes?

But that was two months ago.

Now, with the halfway point of the annual 90-day session having passed, the mood about a tax cut in the State House has shifted from confidence to confusion.

"We're in the third quarter of the game and we don't even know where the goal line is," said Del. D. Bruce Poole, D-Washington.


Part of the problem is there have been many tax cut proposals, and not one has captured the type of widespread support needed to gain approval in a politically and geographically diverse legislature.

Added to that is the growing cynicism among voters and some lawmakers that a tax plan will only shift, not actually cut, a person's tax burden.

The result has some lawmakers thinking there could be no tax cut at all this year.

"I didn't realize it would go the direction it did," said Del. Robert A. McKee, R-Washington.

McKee said he thinks the tax cut is being mistakenly portrayed as the biggest issue of the session, when other issues, like vehicle emissions testing, actually draw more interest from constituents.

"I will be honest. I have had no great numbers of people dialing up my phone saying, `Cut my taxes. Cut my taxes,'" said McKee, a member of the Ways and Means Committee, the House of Delegates panel that considers tax issues.

He and others are quick to point out that whatever tax cut is approved, it won't make anyone rich. Most of the plans center on a 10 percent income tax reduction that would save an average family less than $200 a year.

"We're not talking about a whole lot of money. . . . My fear is we're setting up people to think they're going to have all this money," said Del. Sue Hecht, D-Frederick/Washington.

McKee said he figured that one of the Democrats' latest plans would save him $65 a year in income taxes but also cost him $59 a year in new cable television and telephone taxes - or a net savings of $6.

"That's three Happy Meals at McDonald's," he said.


A major part of most of the tax-cut legislation is the talk of "backfilling" - legislation intended to make up for the $450 million lost from state coffers if a 10-percent income tax cut is approved.

Besides telephone and cable TV taxes, other backfill ideas have included expanding the state's sales tax to include services such as hair cuts and car repairs, placing a tax on health maintenance organizations, increasing property assessment rates and boosting the cigarette tax.

Those ideas have drawn complaints from conservative legislators who believe the best way to cut taxes is by having the government spend less.

Sen. Donald F. Munson, R-Washington, said people are expecting a tax cut and are becoming skeptical when they hear of other taxes being raised.

"They don't think it's a true tax cut," said Munson, a member of the Senate Budget and Taxation Committee.

Poole said a cigarette tax increase, for example, would have an especially detrimental impact on Washington County, where smokers could drive a short distance to West Virginia or Pennsylvania to get cheaper cigarettes.

He said he would look at "minimal" tax increases, but favors budget cuts to pay for tax relief.

"I just feel we ought to cut as far as we can," Poole said.

But he added that the political reality is there is probably not enough support in the legislature to pay for a tax cut through budget cuts alone.

"I don't think we have the appetite for that," Poole said.

On the other side, Hecht warned to cutting services too far. But she still supports a cut.

"If we can show that we can pay for it reasonably, than I think we need to look at it," Hecht said.

Said McKee: "If there is no drastic cut in services that are important to people in Western Maryland, I would certainly be able to support cutting the tax."

Lawmakers anticipate the tax cut picture will become clearer this week when hearings are held in the House of Delegates to review various budget proposals.

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