2 ADDRESSES AND STATE PAPERS

At the same time, on the State level, the existence of a regressive
flat-rate income tax in addition to Maryland's 3 percent sales tax con-
stitutes a genuine hardship upon low and fixed income groups, espe-
cially during this period of inflation.

To this has been added, in some metropolitan areas, a stopgap
earnings tax that is administratively wasteful and highly discrimina-
tory against the wage earner. If he works in Baltimore City, for ex-
ample, it allows him no exemptions for dependents and no deductions
for medical and other expenses. Montgomery County also has a tem-
porary local income tax which must be collected without State assist-
ance at considerable duplication in cost.

The earnings tax was enacted at a special session of the Legislature
which Governor Tawes called last April after the broader Cooper-
Hughes tax reform measure failed by two votes. It expires under the
law July 1, 1967, and the local governments cannot afford to lose this
source of revenue without an adequate replacement.

Numerous past studies have shown the inadequacy and unfairness
of the present tax structure. A sounder, more equitable structure is
mandatory if the State and its political subdivisions are to meet the
demands for better education, health, welfare and public safety pro-
grams placed on them by an exploding population. It is time to stop
talking about it and take positive, affirmative action.

The appointment of this committee is not simply a revival of the
Cooper-Hughes plan of 1966, although several of its members helped
develop that plan and urged its passage. It is highly probable that
the committee will recommend a different approach in several areas.
I leave that to the judgment of the committee and have asked only
that it report to me and to the President of the Senate and the Speaker
of the House at the earliest possible date.

Time is of the utmost urgency. I cannot wait until my inauguration
on January 25, which will be one week after the Legislature has con-
vened, if we are to develop a sound program and hope for its enact-
ment at the 1967 session.

I believe members of both major political parties will be responsive
to the needs of the State, its subdivisions and its people in this critical
matter.

The committee has been assured of complete cooperation from the
State Fiscal Research Bureau and the Governor's office in its studies.