League of Women Voters of Maryland

LWVMD Supports:

• An equitable and efficient fiscal structure for Maryland Improvement of the fiscal relationships between the state and its political subdivisions.
• support or oppose proposed changes to Maryland's revenue structure, by using the following principles to analyze and evaluate the proposed changes.
• A progressive income tax which should be the first choice if a revenue increase is necessary
• A sales tax with exemptions to decrease regressivity
• A motor vehicle fuel ax on a per gallon basis to be used for transportation, with measures included to protect the environment.
• The distribution of state funds to local governments in a variety of ways, based on factors such as population, need, wealth, and tax effort.
• Reduction of the number and complexity of equalization formulas used by the state to distribute money to local governments.
• Statements of intent and periodic review by the legislature of all state-funded programs.
• Permitting legislative reallocation of expenditures within the official state revenue estimate or the Governor's budget proposal.
• Fiscal restraints which promote good fiscal planning and allow for proper budget procedures.

Support for use of the following principles (no single revenue source will meet all principles), with Adequate Yield, Equity Fairness, and Compatibility the most important, and Cost-Effective Administration, Elasticity/Natural Growth, and Equity/Fairness more important than those following.

1. Adequate yield: Adequate and timely revenues are available to finance planned expenditures.
2. Equity/Fairness: The ability-to-pay principle defined as a progressive tax --a graduated tax--which will collect a greater percentage of income from those with higher income than from those with lower incomes; e.g., a graduated income tax with a series of rates and income brackets.
3. Compatibility with state social and environmental policy: The state's policy and tax structure are working toward the same ends, not at cross purposes.
4. Cost-effective administration: Collection costs are low relative to the yield.
5. Elasticity/natural growth: As the economy, the population and/or inflation grows, the revenue system will grow naturally at a similar rate in order to maintain a constant level of services.
6. Equity/Fairness: The benefit principle means a tax or fee will be levied in proportion to the benefit received; e.g. user fees, college tuition, and dedicated taxes. Use of this principle must include an assessment of the impact on low-income people.
7. Simplicity: The revenue source is easy to understand.
8. Certainty: The tax is difficult to avoid.
9. Public acceptance: The political will exists to impose the tax or fee and te public's willingness to comply is evident.
10. Compatibility and links with federal policy. Maryland's budget includes a significant amount of federal funds; the state income tax is pegged to the federal income tax; several other smaller taxes also piggyback on their federal counterpart; and some state taxes are deductible at the federal level.
11. A competitive business climate: The state's policy and tax structure will not adversely impact on-going businesses, or where businesses locate. The costs of inducements, such as tax credits, to businesses to move to or to remain in the state will be considered in the light of Maryland's overall competitiveness and attractiveness. Accountability for the cost of inducements and their results must be included in this policy. (1999)
12. Opposition to:Any constitutional amendment proposed to limit state taxes and spending.
13. Opposition to:Tax of spending limits imposed by the state on local governments.

(1981, 1999)