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Gansler says corporate tax cut would be gradual

Attorney General Douglas F. Gansler released details Wednesday night of his proposal to cut Maryland's corporate income tax to Virginia levels, saying that if he is elected governor he would decrease it gradually over a period of nine years.

Appearing at a Baltimore Sun Newsmaker Forum, Gansler continued his criticism of the O'Malley administration for what he calls its 40 tax increases. However, the attorney general also said he would not seek to reverse them. Instead, he said he would ask tax experts to address the tax strategies of the state in broad terms.

Even before formally announcing his run last September, Gansler was the lone Democratic candidate calling for Maryland to reduce its corporate income tax of 8.25 percent.

"You ultimately want to get to the Virginia rate of 6 percent," he said.

Before Wednesday, however, Gansler had not spelled out how quickly he wanted to reduce the rate — an omission that made his proposal an inviting target for his chief rival. Lt. Gov. Anthony G. Brown's campaign filled in the blank by assuming an immediate decrease, pointing to Department of Legislative Services estimates that such a move would cost roughly $1.6 billion over five years.

Gansler told the forum that figure was a "made-up number."

The attorney general said he would cut the tax rate by one-quarter of a percent each year until the state's rate is even with Virginia's — a process that would take nine years. His campaign estimated the cost to the state treasury in the first year at $35.6 million.

"It'll produce an enormous amount of jobs," he said.

Gansler said he would partly offset lost revenue by introducing a system called "combined reporting" that would capture more money from large multistate companies. Many Democrats believe the current corporate tax system allows such companies to take advantage of a tax loophole that smaller businesses can't use.

The attorney general said no spending cuts would be necessary because the state would gain revenue from the new business it would generate and the jobs it would create. His campaign left some wiggle room on that program, saying a Gansler administration would evaluate progress after each year to make sure the gains were offsetting the rate cuts.

Justin Schall, Brown's campaign manager, said it was "absolutely a fair assumption" to use the $1.6 billion figure as long as Gansler wasn't saying how long he would take to implement the tax cut. Schall called Gansler's new proposal "out of touch and out of step with the priorities of Marylanders."

In response to questions, Gansler staked out a wait-and-see posture on two high-profile environmental issues. He said he could support "fracking" — hydraulic fracturing to extract natural gas — but only if it is proved to be safe. He also said he thought a proposed liquefied natural gas terminal at Cove Point in Calvert County would be a good project for the state but said a final decision should await the results of an environmental study.

On the much-debated issue of marijuana, Gansler said he thinks the United States may be on a path toward legalization but he isn't ready to go there yet. He said he supports decriminalization of possession of small amounts but otherwise would want to proceed cautiously.

"Once you've gone too far, you can't get back," he said.

Gansler's other Democratic opponent, Del. Heather R. Mizeur of Montgomery County, is an outspoken opponent of both fracking and Cove Point and a proponent of legal marijuana.

The attorney general also addressed The Baltimore Sun poll that on Sunday showed him with only 14 percent of the vote, to Brown's 35 percent and Mizeur's 10. Four out of 10 were undecided.

Gansler acknowledged that he is behind but said most voters' support is still soft.

"The campaign hasn't really started," he said.

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