Evening star. [volume] (Washington, D.C.) 1854-1972, 1955-03-31
Smaller Tax Jump
Appears Shaping Up
For Legislative Vote
BY GENE GOODWIN
star star Correspondent

ANNAPOLIS. Mar. Binary
land taxpayers had some hope
today that the Legislature was
ready to give them a smaller
tax bill next year than the
drastic tax increase package
proposed by Gov. McKeldin.
1t would appear. as the Legis-
lature approached a decision on
how it proposes to raise the 1884
million needed to balance rec
ord 1859 million State budget
for next year, that:
/. The State sales tax of 2
per cent will not be raised.
Q. There will be no State tax
levied on cigarettes and tobacco.
3 The income tax rate prob
ably will be increased. but no
more than from the present 2
per cent to 212 per cent.
4. A Withholding income tax
collection system will be started
on July /.
5. There will be some change
In dependent deductions for in
come taxpayers.
McKeldin's Warning
At the start of this Maryland
General Assembly three months
ago, the taxpayers were warned
by Republican Gov. McKeldin
that he was proposing to raise
the sales tax to 3 per cent this
year and the income tax rate to 3
per cent next year. The Cover
nor's tax program also included
initiation OF a Withholding sys-
tenn on July l and an increase
In dependent deductions from
$500 to $1,000.
The Senate Finance Commit
tee yesterday came up with a
"gimmick" program, which pur-
ports to raise $30.8 million in
additional State revenue next
year without actually raising any
tax rates.
About $22 million of this new
revenue would be homecoming,
neceSsitating a search for new
tax sources by next years Legis-
lature.
That's one of the reasons the
House Ways and Means Com
mittee voted, 81 to 2, to reject
the Senate committees plan.
The House members also OBJ
jected to a proposal in the SEN
ate Committees suggestions that
would give the State $8.6 million
in income tax revenues ear
marked for distribution to the
cities and counties under the
Sherbow plan.
How House Leans
The House committee, it was
learned, is leaning toward a plan
to: Cd Begin withholding July /,
(2) allow fiat $500 exemption for
taxpayer and dependents and 90
increase the income tax rate
from 2 to 212 per cent as of next
January /.
The Senate committee made
that same proposal, except that
1t would leave the tax rate at Q
per cent.
Additional revenues accruing
to the State under the House
income tax plan amount to 1884
million. The Senate proposal
would bring in $19.6 million.
The Withholding plan itself
would be a revenue-producer in
its first year. It would telescope
income tax payments, adding
about $13.5 million to the State
treasury in the first year of
operation. 1t also would bring
In an additional estimated $50
million from taxpayers who
would be made to pay State in
come taxes for the first time
through Withholding.
The $500 fiat income tax de-
duction would add another SIS
million. according to estimates
supplied to the two committees
by State fiscal officials.
Against S2.9 Million Cost
The Governors proposal of a
fiat $1,000 deduction would cost |
$40 million.
Under existing law. the tax
payer is allowed a 1000 deduc-
ton for himself, another 1000 |
for his wife and $500 for each |
dependent.
There is some support in the
House committee. it also was
learned, for increasing the in
come tax on corporations from
4 to 5 per cent and the fiat
$1,000 individual income tax de-
duction, both part of Gov. Nc
keldin's program.