New ideas to better the Old Line State
2 groups denounce O'Malley tax plan
Originally published in the Baltimore Sun
By Laura Smitherman and Kelly Brewington
Published on Friday, October 26, 2007
MPPI IN THE NEWS
Gov. Martin O'Malley said today he's confident that he will secure the votes needed to pass his budget solution in the General Assembly special session that starts Monday.
"I believe that the votes will be there for this to be a successful special session," the governor said in an interview.
O'Malley has proposed a combination of tax measures and spending cuts to close a projected $1.7 billion budget shortfall for the fiscal year that begins July 1. He has previously said that he is inclined to ask for a voter referendum on whether to legalize slot machine gambling.
"There will certainly be some tweaks as you see the bills later on today and certainly some changes to the slots legislation," the Democratic governor said around noon. "But overall, the components of the packages we have all been talking about over the last three weeks with the public we all serve are pretty much going to be the components that we introduce."
O'Malley has outlined a plan that calls for an increase in the state sales tax from 5 cents to 6 cents, extending the tax to cover more services, changing the income tax structure so that high earners pay more and low- and middle-income filers pay less, an increase in the corporate income tax rate from 7 percent to 8 percent, closing corporate loopholes and a property tax reduction.
The Maryland Public Policy Institute and the Washington-based Tax Foundation denounced O'Malley's fiscal plan today, saying it would decrease the state's ability to attract and grow businesses.
"Lawmakers in Annapolis seem to believe they have little need to rein in spending," said Christopher B. Summers, president of the Maryland Public Policy Institute, which released a study today saying past tax cuts are not to blame for the state's projected $1.7 billion deficit. "But it cannot tax itself out of this problem."
Summers said the state should instead reduce and re-evaluate spending on costly programs. On Monday, the Maryland Public Policy Institute will begin airing an anti-tax ad on WBAL radio.
Meanwhile, the Tax Foundation, a research group that favors lower taxes, released a separate study yesterday saying O'Malley's plan would have a "crushing impact" on business competitiveness.
According to the foundation's analysis of income, sales, unemployment and property taxes, Maryland is the nation's 24th best state for business competitiveness. Under the governor's plan, the state would fall to 43rd, said the study's author Curtis Dubay.
The plan would also increase the state and local tax burden, the measure of taxes as a percentage of income.
"Maryland's increased tax burden and less competitive business tax climate will severely lessen the state's ability to attract new or expanding businesses and their jobs."
O'Malley spokesman Rick Abbruzzese disputed the groups' claims, saying the governor's plan will result in 83 percent of Marylanders' paying less or the same in their taxes and that the state will actually grow jobs due to the military's base realignment and closure plan.
"In terms of hurting the state's changes at attracting and expanding businesses, we actually know from experience that the opposite is true," he said. "Maryland is expected to get 40,000 to 60,000 BRAC-related jobs in the next few years ... And the things we have proposed actually keeps us competitive with other states."
laura.smitherman@baltsun.com
kelly.brewington@baltsun.com
Copyright © 2007, The Baltimore Sun
