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Inheritance tax cuts face obstacles

April 02, 2000|By LAURA ERNDE

ANNAPOLIS - When the Maryland General Assembly convened in January, it seemed certain that the state's inheritance tax would be repealed this year.

Assembly leaders tagged it as their top priority and Gov. Parris Glendening put money in his budget to pay for it.

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But with a week to go in the session, lawmakers are trying to figure out the best way to salvage a meaningful inheritance tax cut.

Many members of the Washington County Delegation are disappointed. They had also hoped to see more money being returned to the taxpayers in a year when the state saw a nearly $1 billion surplus.

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"It's a little hard to believe that we can't afford it," said Del. Robert A. McKee, R-Washington.

The inheritance tax issue was complicated by the fact that the registers of wills in each county now rely on the tax for income.

The House proposed raising probate fees to compensate for eliminating the tax.

Instead of a fee increase, the Senate decided to eliminate the tax for spouses and children, but keep it for siblings and other descendants.

Neither alternative goes as far as lawmakers originally intended.

"It's not going to be what I personally thought, so what justice have we done to the people in the state of Maryland?" asked Del. Louise V. Snodgrass, R-Frederick/Washington.

Republicans tried to restore the tax cut to its original form with proposed amendments, but lawmakers who worked on the state budget said that would require millions of dollars in cuts.

"That was really difficult for me," said Munson, R-Washington, a member of the Budget and Taxation Committee. "It's a $21 million hole in the budget I didn't know how to fill. The only way would have been to kill projects."

Munson, who proposed inheritance tax cuts last year, said lawmakers did the best they could to cut the governor's budget.

The process doesn't lend itself to tax cuts, argued Senate Minority Leader Martin G. Madden, R-Howard/Prince George's.

Glendening essentially spent the state's surplus, mostly on one-time costs such as higher education and public school construction, when he proposed his budget at the start of the session.

Legislators can only cut from his budget, which makes it difficult to work in tax relief, he said.

Del. Joseph R. Bartlett, R-Frederick/Washington, said giving money to government is like giving money to a child and instructing them to buy all the toys they need. No matter how much you give, it will get spent.

In addition to repealing the inheritance tax, legislative leaders also set their sights on speeding up a 10-percent income tax cut this year. But it didn't happen after Glendening didn't carve out the money.

By increasing spending now, the state will be in a bad position of the economy takes a nosedive, said Del. Christopher B. Shank, R-Washington.

Washington County lawmakers were heartened by the fact that there should be some relief from the inheritance tax this year.

"It's better than nothing. It's a start," Shank said.

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