Evening star., 1955-01-05
MckeIdin Due
To Ask.1-Cent
Sales Tax Rise
Program Calls
For 80 Levy on
Incomes in 1856
By Gene Goodwin
Star ssaff Correspondent

Legislature for a. i-cent in
crease in the State sales tax this
year and a so per cent boost in
the State income tax next year.
In addition, authoritative
sources said the Governor will
GoIdstein TO Be Maryland Senate Presi-
dent; Luber Speaker. Pose A-S
seek a payroll withholding sys-
tenn for collecting income taxes
beginning July /.
He also Is expected to propose
an increase in the income tax
exemption for dependents from
$500 to $1,000. beginning with
institution OF the withholding
plan.
In the Governors proposed tax
timetable, sources here said. the
1-cent increase in the sales tax
would take effect June ]. and the
raise in the State income tax
from Q to 8 per cent would take
effect in calendar 1856.
Budget Exceeds $3.50 Million.
That apparently is the Repub-
lican Governors answer to the
large gap between anticipated
revenues and expenditures in the
$3.50 million plus State budget
being worked up for next fiscal
year. Earlier last month the
Governor had said he would need
$50 million In additional rev.
enues in order to maintain the
present standard of State serv-
ices next year. Now, 1t Is UNDER
stood. his revenue estimators
have lowered that figure to $28.6
million.
An increase In the retail sales
tax from Q to 3 cents on dollar
would bring the State an extra
SIT million next fiscal year. ac-
cording to the latest estimate Of
administration financial aides.
An, additional windfall of
about $l2 million would result
If the State starts using with
holding system for income taxes
next fiscal year, the same sources
said.
Gov. McKeldin was expected
to outline his two-year tax pro-
gram in his Estate of the State"
address to the 1855 Maryland
General Assembly which was to
convene its 90-day session here
today.
Message Possible Tonight.
If the Senate and House or
ganize quickly and select their
leaders without delay. Gov. Nc
Keldin probably will deliver the
message to a joint session to-
night.
The Legislative Council, in
terim study group of the Legis-
lature, suggested last fall that
Maryland begin withholding in
come taxes. The council saw the
inauguration of such a system
as a means of picking up 50 to
So million from residents who
now evade payment Of State in
come taxes.
The Governor apparently is
planning to use the Withholding
system as a speedy money-maker
so that he won't have to raise
the sales and. income tax rates
at the same time.
The windfall in the first year
Of a withholding system comes
about because the State would
be collecting all Of calendar 1855
income taxes and the first half
of calendar 1856 income taxes
both in the next fiscal year be-
ginning July !.
Budget Due This Month.
The Governor is not expected
In his address to 60 into much
detail on the workings of the
WiCnnolQlng system. he might
do that later this month when
he presents his proposed budget
to the Legislature.
It was learned from fiscal
sources. however. that Mary
land officials have been assured
by the Federal Government that
1t would be willing to withhold
State income taxes from Mary
land residents working at Fed
eral installations in Maryland.
Zone is considered to be q
Maryland resident ordinarily aft
er living in the State for six
Fmonths.)
The question of withholding
State income taxes from Mary
land residents working in the
District Of Columbia, either for
the Federal Government or pri-
vate employers, is still one to be
worked out. Some fiscal sources
here suggested that it might be
sirnnlar to ulinxu Siinh fayrn vars