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Maryland Meets New Year With Income Tax Cut

By Daniel LeDuc
Washington Post Staff Writer
Thursday, January 1, 1998; Page D01

A phased-in reduction in the amount of income tax Maryland collects begins today, the most significant new legislation to become law in the region as the new year begins.

Under the legislation, the state's top tax rate will be cut from 5 percent to 4.75 percent over the next five years, and the value of personal exemptions will rise from $1,200 to $2,400 over the same period. Taken together, the changes will reduce the average income tax bill in Maryland by 10 percent.

The tax bill for a typical family with an income of $50,000 will drop about $55 this year, state officials said. They said the tax law changes will cost the state about $40 million in reduced revenue this year.

The General Assembly passed the tax cut during the 1997 session after it was proposed by Gov. Parris N. Glendening (D). He had been under pressure to reduce taxes since his narrow victory over Republican Ellen R. Sauerbrey, who had campaigned on cutting taxes. Since Glendening took office, Republican legislators and the governor's own economic development advisers had recommended a tax cut as well.

At a time of economic prosperity, said Glendening spokesman Ray Feldmann, "it puts money back into the pockets of taxpayers."

The cut also allows Glendening to have a ready argument to answer GOP challengers seeking to run on tax relief in this year's gubernatorial election. But in the process, he has angered some in the liberal wing of the Democratic Party who see the tax cut as too small to mean much to people while it reduces state revenue that could support new programs.

"It's a couple of Big Macs a month for the typical family, but it's a huge hit for the state," said Sen. Brian E. Frosh (D-Montgomery).

New legislation that becomes law today also requires Maryland health insurers and health maintenance organizations to provide coverage for diabetes equipment, insulin and education for the state's 190,000 residents with diabetes.

Because of increased caseloads, other new legislation has added an additional circuit court judge for each of Montgomery, Prince George's, Anne Arundel and Baltimore counties and additional judges for Districts 5 and 8 in Montgomery and Prince George's.

Also today, state inheritance taxes will be reduced with new legislation that makes more small estates exempt from the tax.

And massage therapists, a group that had been unregulated, now must be licensed after undergoing training and certification by the state Board of Chiropractic Examiners.

Across the Potomac, several new laws go into effect in Virginia as well. People buying personal watercraft, such as Jet Skis, will have to pay a 2 percent sales tax. Motorized vessels less than 15 feet long had been exempt from the motorboat sales tax. The new law also lowers the tax, which was 4.5 percent, to 2 percent.

Virginia also will begin to develop a program to certify water quality laboratories. Lab certification is part of a wider push by the state to reduce pollution in its waterways.

Virginia has maintained that water quality has improved, but a 1996 legislative audit commission found a trend of increasing pollution in some river basins, notably the Rappahannock.

Staff writer Ellen Nakashima contributed to this article.

© Copyright 1998 The Washington Post Company

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