Evening star. [volume] (Washington, D.C.) 1854-1972, 1958-01-27
ny CHARLES L. R0FFNIAN
star stan Writer

by CHARLES L. HOFFMAN
sats star stan Writer
sgn A SO per cent increase In
the Maryland income tax rate,
/, retroactive TO January l, and q
SO per cent rise in the sales
tax rate starting November |,
have been proposed by Gov.
McKeldin.
The proposals are outlined in
advance copies Of the Gov
ernor's budget message sent to
legislators over the week end.
The message Is due for ofiicia.
delivery to the General AS
sembly when Is convenes
February S.
Gov. Mckeldin viii present q
! record budget TO finance the
State government during the
fiscal year beginning July /.
s4 The message confirms earlier
reports from the Governors
once that the general fund
budget would be about SlS3
million and that both income
and sales tax raises would be
proposed.
The exact general fund bud
get figure is sls3.4s6.475. State
agencies had asked for some
Sl9i million.
$3Se Million Sought
The total State budget is q
whopping S3o6 million that In
cludes Sass million in special
funds and sss.i million in Fed
eral funds.
The Governor said S30.5 mil
lion In new revenues would be
needed to bridge the gap be-
tween available funds antici-
pated and his proposed general
fund spending program.
The income tar rate would
Be raised from 2 per cent to 3
per cent on earned income and
On the tirst $500 on investment
income. The 5 per cent rate
on investment income over
$500 would not be changed.
The Governor proposes max
ing this increase retroactive to
January l. Il would not affect
withholding tax rates. however.
until July /.
The result Of this would
mean an extra heavy bite on
taxpayers when they file their
returns for 1858 in the spring
Of 1859.
$40 Million Windfall
Gov. McKeldin estimates
that the State would get some
126.2 million in additional
funds through this proposal.
BY making the tax retroactive
the State again would collect
Q windfall Of some $40 million.
The Governor is proposing
that the sales tax rate be in
creased from 2 cents to 81
cents on the dollar. He would
defer this raise. however. until |
next November / three days |
prior to the general election.
1.-The new sales tax rates would
MT affect purchases under
81 cents. The new rates would
mean a 2 cent tax on purchases
from 81 to Sc cents; 3 cents on
81 cents TO 81: ( cents on
sl.Oi to Sl.33: 5 cents on Si.34
to s1.66: 8 cents on sl.67 to 81
and so on.
The Governor estimates that
$l2.S million would be raised
In new revenues by this
measure.
Result Of Proposals
The end result Of the two
proposals are:
I. A delay in the direct effect
the tax increases viii have on
the voters pocketbook with the
heavy bites being deferred until
after the November election.
2. An illusion that the in
come tax is raising more money
than the sales tax when Just
the reverse is true.
A so per cent increase In the
sales tax has been estimated
10 bring in some SIS million q
year while a so per cent rise in
the income tax brings in an es-
timated $12 to SIS million.
The Governor. according to
his message. also Is proposing
that all Of the new revenue
raised by the income tax IN
crease be held by the State. At
present the counties and mt
inequalities get q - per cent
cut Of the income tax.
The general fund budget Il
up IL per cent. The actual
increase in S19.7 million.
This includes $50 million for
salary adjustments for State
employees.
Other Increases
Other major increases over
present spending include 81
million for education: S3.2 mil
lion for retirement and social
security: SIS million for public
welfare and training schools:
SIT million for public health;
and Sill million for mental hy-
giene.
The Governors budget does
not include provision for Q $500
teacher pay raise to be financed
by the State. The Governor
vetoed this measure last year.
He again urged the Legisla-
ture to sustain that veto. He
said the revenue to be pro-
duced by q 3-cents-a-pack ciga-
rata tav wo,ild fall SHIRT NJ