By Raymund Lee Flandez
ANNAPOLIS – Big companies and wealthy individuals benefit from at least $421 million a year through state tax breaks, according to report released Tuesday by Progressive Maryland.
It found 52 “loopholes” that included exemptions for ski resorts to make artificial snow, property tax breaks for country club golf courses and sales tax credits for large purchases of gold and silver.
The group is urging lawmakers and Gov.-elect Robert Ehrlich to consider reforming the tax code to help balance the state’s projected $1.2 billion shortfall next year, instead of slashing funds in education, raising new taxes or laying off state employees.
“Closing these loopholes all by itself could very well account for half the budget deficit,” said Sean Dobson, the co-author of the report and director of Progressive Maryland, a coalition of 10,000 Marylanders, faith congregations, community groups and labor unions.
Dobson said their section-by-section analysis of the state tax code, as well as other state government publications, also found 18 reported loopholes did not have a specific cost attached to them, potentially enlarging the state’s revenue loss each year.
Some of the loopholes cited in the report include:
— A $2.7 million credit for salaries paid to Maryland-based administrative employees of a Delmarva utility company.
— About $650,000 in tax breaks for country clubs, whose fairways have been declared environmentally sensitive “open space.”
— An exemption on energy taxes for ski resorts when they make artificial snow, a tax savings of about $8,000.
— A $700,000 sales tax exemption each year for people buying large quantities of precious metals.
The report said the breaks are seen by political donors as a return on their investment in a campaign, and it suggested public financing of campaigns as a long-term solution.
“We need to make sure that millionaires are paying their fair share of taxes,” Dobson said. “And we hope that lawmakers can try to pull some courage and stand up to their deep-pocket campaign contributors.”
Delegate Elizabeth Bobo, D-Howard, commended the group for bringing the issue to the forefront, especially when the state is trying to find solutions to its fiscal problem.
“(The report is) a very good tool that legislators can work with if we want to reverse the trend that has become established,” of additions to the state tax code, Bobo said.
But others said the exemptions promote growth and business in the state.
“Under examination, I believe it will be found that many of these exemptions can be directly related to the creation of jobs,” said Robert O.C. Worcester, president of Maryland Business for Responsive Government. He said the report is just trying to find a way to blame the budget deficit on businesses.
“In anticipation of the intense politics that are sure to surround the budget deficit, so-called Progressive Maryland is staking out a position based on the assertion that they have found corporate welfare,” Worcester said.
Sen. Barbara A. Hoffman, D-Baltimore, the outgoing chairwoman of the state Senate Budget and Taxation Committee, called the Progressive Maryland effort well-meaning, but she wondered how many of their suggestions would be taken up by the next Legislature.
“There may be some areas that deserve review,” Hoffman said. “But I don’t think it’s rational or reasonable to expect all of the tax breaks to disappear.”
