By Michael Dresser, The Baltimore Sun
8:53 PM EST, February 5, 2014
Lt. Gov. Anthony G. Brown, a leading candidate for the Democratic nomination for governor, sharply criticized one of his rivals Wednesday for supporting a proposal to cut Maryland's corporate income tax.
The Brown campaign released a statement saying Attorney General Douglas F. Gansler has failed to explain how he would make up the revenue that would be lost by reducing the tax from 8.25 percent to 6 percent.
Such a "corporate giveaway" would cost Maryland more than $1.6 billion over the next five years, the Brown camp charged. Brown campaign manager Justin Schall pointed to revenue estimates from the nonpartisan Department of Legislative Services that such a cut would reduce state revenue by about $300 million a year.
"Doug Gansler has been in lock step with Republicans who want a $1.6 billion corporate tax handout that would defund our schools and put the brakes on several job-creating infrastructure projects," Schall said.
Brown himself was still with his family Wednesday following the death of his father in New York last week. His campaign remained active, however, using a hearing in Annapolis on a Republican-sponsored tax-cut bill to taunt the attorney general.
"Will Gansler join with Republicans by testifying and explaining which programs he'll slash or schools he'll close to pay for this reckless corporate tax handout?" Brown's statement said.
In fact, Gansler did not appear at the hearing on the legislation, which is not expected to pass. However, his campaign spokesman said the attorney general stands by his position that the tax should be cut.
"He thinks it'll bring businesses back to Maryland," said spokesman Bob Wheelock.
Wheelock questioned whether the legislative analysts' estimates accounted for the revenue that might be generated from new activity spurred by lower taxes.
The answer is yes, according to the legislature's chief budget analyst. Warren Deschenaux, director of the General Assembly's Office of Policy Analysis, said his agency recently conducted a study that showed new business would not offset the lost revenue for the foreseeable future.
Deschenaux said that because of the state's constitutional requirement for a balanced budget, the lower corporate revenue would have to be offset with either spending cuts or by raising other taxes.
"Nothing's free. There is no fiscal cold fusion. Actions have consequences," he said.
Wheelock said Gansler will soon release an economic plan that would explain how he would account for what is likely to be a phased-in corporate tax cut. The spokesman declined to say whether increases in other taxes were under consideration.
The third candidate in the June 24 Democratic primary, Del. Heather R. Mizeur of Montgomery County, called Gansler's proposed cut to 6 percent "a race to the bottom." She has proposed targeted tax cuts for small business — paid for by capturing more corporate revenue from large firms doing business in multiple states.
At Wednesday's hearing on a tax cut bill sponsored by Senate Minority Leader David R. Brinkley of Frederick County, the measure drew qualified support from several business groups. However, the Maryland Chamber of Commerce endorsed a smaller cut — to 7 percent over five years — than favored by Brinkley or Gansler.
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