H.B. 1154                                                VETOES,

Preamble

WHEREAS, In light of increasing competition among states for business and
economic development, Maryland must move into the 21st century as competitively as
possible, providing a progressive business climate conducive to job development and a
secure job market; and

WHEREAS, Our tax structure plays a major part in fostering economic
development and keeping the State's business climate competitive; and

WHEREAS, Of all the elements of the State's current tax structure, Maryland's
high State and local income tax burden, well ahead of the State's regional competitors, is
particularly criticized as creating an unfavorable tax climate and as being a major
anti-growth impediment to business and industry locating in the State; and               

WHEREAS, This Act provides immediate income tax relief in the form of a
phased in reduction in order to make Maryland's personal income tax more competitive
with other states on a regional and national basis, while maintaining responsible fiscal
safeguards against future uncertainties, such as proposed federal government budget
reductions and mandates, proposed federal income tax changes which could flow through
and automatically impact Maryland income tax revenues, and the potential effect on State
revenues of an economic downturn; and

WHEREAS, Much of the tax structure from which the State's revenues are largely
derived was designed decades ago for an economy that no longer exists, with the decline
of manufacturing relative to other areas of the economy and the major growth of
industries generated by new technologies;

WHEREAS, Principles of good tax policy dictate that the State's revenues should
come from a balanced, broadly based mix of sources and that the State's tax structure
should facilitate economic development and should be responsive to interstate
competition; and

WHEREAS, Although based on percentage of income, the overall tax burden in
Maryland is below average compared to all other states and is second lowest among states
in the region, the State's relatively high tax burden as measured on a per capita basis is
often cited as a disincentive for businesses considering relocating or expanding to
Maryland; and

WHEREAS, There is a need for a coordinated examination of the overall State and
local tax structure to consider its consistency with the needs of a changing economy, to
improve Maryland's business climate, and to provide a basis for reducing the tax burdens
on Maryland's citizens;

WHEREAS, In addition to providing immediate income tax relief, this Act creates
a Joint Legislative and Executive Task Force to Review the State's Revenue and Tax
Structure to provide an opportunity for the development of a long-term strategy for
overall modernization of the State's taxes to insure competitiveness of the State into the
21st century; now, therefore,

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That the Laws of Maryland read as follows:

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