3102                                                 VETOES

3%. In either case, this would make the combined
effective State and local income tax rate for Baltimore
County residents in excess of 10%, which, even at that
level, would, in the opinion of the Council of Economic
Advisers, seriously jeopardize future opportunities to
raise the State income tax. The problem is compounded,
moreover, by the lack of any limit on the new tax. The
County Council could, if it chose, impose a 5%, or 10%,
or 50% income tax, over which the State would have no
control.

House Bill 314 has been represented as a local bill
for Baltimore County. An analysis of its implications,
however, makes clear that it affects not only the State
but every other subdivision. Increasingly in past years,
the State has shared its revenue with the subdivisions,
both directly and by assuming larger shares of what had
formerly been local programs. The State has made major
commitments to public education, school construction,
social service, law enforcement, and health programs, and
has assented to significant decreases in local
contributions to these programs. The ability of the
State to maintain its commitment, much less to increase
it, is obviously dependent upon its ability to secure the
necessary revenue; and, by fettering the State's most
viable option to secure that revenue, House Bill 314 may
very well serve to limit the future levels of assistance
rendered to all of the political subdivisions.

The effect of the bill on Baltimore County is more
immediate and more drastic. After deducting existing
credits for aged and disabled persons, Baltimore County
expects to collect over $87,000,000 from its real
property tax in fiscal year 1974, which will account for
nearly 40% of its total general fund revenue. Of that
amount, over $72,000,000, (more than one—third of the
County's total general fund revenue) will come from the
tax on residential property, and will have to be replaced
by an income tax.

As of June 30, 1973, the County had authorized debt
of over $203,000,000, all of which is currently supported
directly or indirectly by the property tax. An
additional $322,000,000 is estimated to be needed in the
County's six year capital program, a large part, if not
all, of which would be supported in the main by the
property tax sought to be repealed by House Bill 314.

Whatever social and economic inadequacies there may
be with the property tax, it has the critical advantage
of stability and relatively predictable growth. This is
why it has historically served as the base for State and
local government bonded indebtedness. A tax on net
income, particularly in a county which does not have the
broad economic mix and diversification of the State,