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Hogan and taxes

We can completely understand why some Democrats are fuming about Gov. Larry Hogan's announcement this week that he would seek tax cuts in the upcoming General Assembly session. He issued three press releases and zero details. He got big headlines for promises without hinting to the public that there might be any trade-offs involved. He acted as though everything good that is happening in the state right now is the direct and immediate result of his not-quite-year-old tenure. Next thing, he'll probably be taking credit for the sun rising in the east and setting in the west.

But it's not exactly news that a politician would be immodest about his accomplishments or vague about his promises. Former Gov. Martin O'Malley wasn't shy about taking credit for things (like, say, Education Week's rankings for the state school system), and we're confident Anthony Brown wouldn't have been either, had he been elected. Mr. Hogan just happens to be particularly adept at that art in the age of social media.

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Filtering out the hyperbole, what Mr. Hogan actually said Thursday may well turn out to be eminently reasonable. We don't know exactly what taxes he'll cut — other than his promise to target families, retirees and small business owners — but the scale of what he has in mind is surprisingly modest. He is proposing $400 million in cuts over five years, or a reduction in general fund revenues of less than half a percent per year. If anybody should be mad about that, it's all the people who expected him to reverse the O'Malley tax increases. This wouldn't even come close.

For sake of comparison, take the record of former Gov. Parris N. Glendening. He is hardly known as an anti-tax crusader, but the income tax cut he pushed through the legislature dwarfs Governor Hogan's promise in its scale. It was expected at the time of passage to cost the state $412.3 million in the first year after it was fully phased in, which was about 10 times as much as what Mr. Hogan is contemplating, relative to the size of the state budget at the time. Critics may call Mr. Hogan's promised tax cuts a political exercise rather than the product of a rational evaluation of the tax system, and they may well be right. But Mr. Glendening's tax cut is generally considered to be nothing more than an attempt to strengthen his position heading into a re-election rematch with Ellen Sauerbrey.

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As for the other part of Mr. Hogan's announcement, that he would seek flexibility from the legislatively-mandated spending increases baked into the annual budget for education, health care, public safety and the like, that's an idea that needs to be considered very cautiously. The fact of the matter is that governors and the legislature have always provided themselves with an out from mandated spending formulas by granting one-year exemptions. What Mr. Hogan is proposing, though, would shift power from the legislature to the governor in those situations, and given what is already an extremely executive-heavy budgeting process in Maryland, that's not something to be taken lightly. However, it's by no means unreasonable for him to have brought up the idea of tying mandated spending increases to state revenue growth. Mr. Brown said in his endorsement interview with The Sun in 2014 that, if elected, he would do exactly the same thing.

We aren't thrilled by the governor's announcement first, details later approach to governance. It has worked out at times — the closure of the Baltimore City Detention Center, for example, went relatively smoothly despite appearing not to have been particularly well thought through at the time of the press conference. But it doesn't inspire confidence when he makes a splashy announcement about a revamp of the region's bus routes before consulting with those who use it, or promises a $700 million plan to clear blight in Baltimore without any details about where most of the money is coming from or how much of it is actually pre-existing funding.

Most of all, though, we are concerned about whether Mr. Hogan's tax plans represent a missed opportunity. The General Assembly's commission on economic competitiveness has spent the last several months studying the state's tax structure, and the political possibility may exist for a far more comprehensive reform than what Mr. Hogan appears to be contemplating. If he wants to change Maryland, that is what he should pursue.

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