House Democrats agree to alter corporate-tax bill, co-opting GOP


Democrats in the House of Delegates agreed yesterday to alter one of their signature proposals for the current Assembly session - the closing of a corporate tax loophole - co-opting a Republican strategy.

House Speaker Michael E. Busch's top priority this year is a bill that would keep some corporations from avoiding transfer taxes when they sell real estate. Busch wants limited liability corporations to pay the tax, with the proceeds dedicated to school construction - a huge need in the state.

But Gov. Robert L. Ehrlich Jr. has another idea for raising school construction funds: slot machines.

In an effort to help the governor, Republicans in the House of Delegates have been pushing for a change to Busch's loophole plan. They say that if the loophole is closed, all the money should be used for land preservation, the original intent of the transfer tax first imposed in the late 1960s.

The GOP proposal had the dual advantage of keeping the heat on for slots and pleasing environmentalists. Ehrlich has transferred tens of millions of dollars from land-preservation funds during the past three years to help balance the budget.

Yesterday, House Democrats partially embraced the Republican suggestion, saying that the state portion of loophole-closing money, about $12 million a year, would go for land preservation. A larger pot of money, $45 million yearly that goes directly to the 17 counties that impose their own transfer tax, would be used for school construction for four years before reverting to land programs.

A final House vote on the plan, which died in the Senate last year, is expected this week.

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