ANNAPOLIS – No slots. No budget cuts. No deficit.
Progressive Maryland believes the state can close its $1.7 billion deficit solely by closing corporate tax loopholes and increasing taxes on businesses and “rich folks.”
The public policy group’s budget plan, which was released Tuesday, includes $1.21 billion in tax increases and $456 million in loophole reduction.
“The way to balance the budget is (with) more revenue, not cuts,” Deputy Director Sean Dobson said.
Given Maryland’s relatively low tax rate, Dobson said, “The big question is will legislators craft a budget that reflects the will of the people, or have one that represents the big?”
The Tax Foundation ranks Maryland 37th in state and local tax burden for 2002, and 29th in total tax burden among all U.S. states. Gov.-elect Robert Ehrlich, who will release his budget plan Friday, has said he will not raise taxes to close the deficit, but will rely instead on spending cuts and new revenue sources, including slot machines at race tracks. Ehrlich’s office could not be reached for comment.
Although Ehrlich has said he will not approve taxes, which comprise more than two-thirds of Progressive Maryland’s plan, Dobson said the group’s proposal may have an impact.
“He’s not the only actor. He’s going to have to compromise,” Dobson said.
“Everything is on the table,” said House Majority Leader Kumar Barve, D- Montgomery. “I look forward to using several of these suggestions.”
“Cuts and slots should be last options,” Barve said. “Creating equity in the tax code should be a first priority.”
Several lawmakers who attended the Progressive Maryland news conference Wednesday said they were pleased the group’s plan showed the budget could be balanced without slots or budget cuts.
There is “a gross inequity in Maryland’s tax structure,” said Delegate Elizabeth Bobo, D-Howard, and praised the group’s effort.
According to the plan, the state could raise $270 million by increasing the taxes on individuals making more than $100,000 a year and families reporting at least $150,000.
All earnings over those levels would be subjected to an additional 1.25 percent tax, taking it from 4.75 percent to 6 percent.
Millionaires would face an extra bite and have to pay 7 percent on their annual earnings over $1 million, or 2.25 percent more.
Businesses would bear the lion’s share of the responsibility for closing the deficit. About $600 million to $700 million would come from a business service sales tax on industries like temp agencies, payroll services, management consulting, computer and technical programming and real estate management.
A financial services tax on things like investment planning and estate management would add another $190 million.
The Progressive Maryland plan would also double the tax on alcoholic beverages — boosting taxes to 4 cents per bottle of beer, 80 cents per gallon of wine and $3 per gallon of distilled spirits — for $25 million in revenue.
All of the group’s tax plans came from Commission on Maryland’s Fiscal Structure Chairman Fred W. Puddester’s presentation of budget and revenue options in November of last year.
“We just circled the stuff we thought was consonant with the state’s progressive ideals,” Dobson said.
The group also proposes to close the 51 loopholes and business incentives worth $346 million a year it revealed in a December report. Those loopholes include tax-free purchases of gold and energy company exemptions on purchasing and burning Maryland-mined coal. ` The report proves the budget can be balanced “in a reasonable way,” Bobo said, without cutting services or legalizing slot machines.