ANNAPOLIS – An educated work force is more likely to attract businesses to Maryland than a change in the personal income tax rate, the vice chair of the Federal Reserve Board told lawmakers Tuesday.
During a briefing before the House Appropriations Committee, Alice M. Rivlin shared her views on Maryland’s economy and the two most controversial issues confronting the General Assembly this session: tax cuts and gambling.
“Personally I’m a little skeptical of the usefulness of competitive tax rate reduction between states,” Rivlin said.
“The quality of the labor force and school system are bigger indicators [that a business will relocate] than the tax rate, especially the personal tax rate.”
By some measures, Maryland has the fourth-highest tax burden in the United States. Lawmakers hope lower taxes will entice more businesses to relocate here.
Rivlin’s remarks come after Maryland Gov. Parris N. Glendening and House Speaker Casper R. Taylor Jr., D-Allegany, have each introduced legislation lowering the personal income tax rate by 10 percent. Republicans also have introduced several income-tax reforms, the most significant of which would cut the rate by 24 percent over four years.
The Federal Reserve is the central bank of the United States, and its seven member Board of Governors sets interest rates and regulates banks. President Clinton appointed Rivlin to the Board of Governors in June 1996.
Rivlin, founding director of the Congressional Budget Office and former director of the White House Office of Budget and Management, said Maryland’s “strong” institutions of higher learning and scenic beauty are two of its greatest attributes.
Whether the state should allow racetracks to add slot machines is also being hotly debated during this session. Advocates claim the additional revenue will help salvage a vital industry. Opponents worry that slot machines will pave the way for casino gambling.
Rivlin disparaged the merits of legalized gambling, while acknowledging that New Jersey and Nevada were exceptions.
“I haven’t looked at the numbers lately,” Rivlin said. “But the experience has been a little disappointing in states that have done it. In general, it has not turned out to be a big source of income.”
Glendening renewed his promise to veto gambling legislation during his State of the State Address. But Senate President Thomas V. Mike Miller Jr., D-Prince George’s, has accused the governor of having his head in the sand about gambling, given that gambling already exists in the state. Miller has floated a proposal to link legalized slots with the tax cut in a single piece of legislation. -30-