MARYLAND TAXPAYERS ASSOCIATION URGES DEFEAT OF HB 1449
ADDING AN UNCONSCIONABLE BURDEN TO OUR INDEPENDENT BUSINESSES AND PUTTING THEIR EMPLOYEES AT RISK OF BECOMING UNINSURED
Prepared Testimony of MTA vice president Richard Falknor
to the
Maryland House Ways and Means Committee March 26, 2002

Chairman Hixson and members of the committee, I am Richard Falknor, vice president of the Maryland Taxpayers Association (http://www.mdtaxes.org).

Our statewide grass-roots volunteer organization strongly opposes HB 1449 imposing the two per cent insurance premium tax on HMOs. There have just been large health insurance premium increases. This measure carries the likelihood of further burdening Maryland employers with increased costs. Smaller employers often share pro rata the cost of health insurance premiums with their employees. Thus, any increase in health insurance premiums runs a risk of employees giving up their health insurance. This in turn contributes to the tax burden of caring for the uninsured.

MTA, committed to a free market or "opportunity society," has been urging in testimony on HB 939 the sale of mandate-free Essential Health Insurance to individuals as a means of providing affordable health care to more Maryland families with minimal public intervention in the practice of medicine. HB 1449 on the other hand, leading to additional rises in premium costs for employees of independent businesses and for individual policyholders, would work to an opposite effect. The number of uninsured would likely be increased.

HB 1449 would add a tax burden of over $ 257 million over five years to Maryland's recession-battered economy. But recall that other tax burdens, achieved by an alchemy called 'decoupling' (unlinking the affected provisions of the Maryland tax code from the two recent Federal tax cuts) already have serious if not decisive support in the General Assembly:
· The disallowance of college-tuition deductions resulting in a burden to Maryland families of $ 56.4 million over four fiscal years.
· The burden of $ 100 million of Maryland business taxes in just the first fiscal year of its effect (2003) arising from the "decoupling" of the Maryland tax code from the mini-stimulus bill just signed by the President on March 10.
· The state death (estate) tax burden will be about $ 312 million over five fiscal years.

As older Marylanders flee to tax-friendly states, our own economy suffers. Minority entrepreneurs in particular do not want to see their enterprises taxed away on their death denying their families and descendants the chance to realize the American dream.

Surely before adding another penny in taxes, it is time for the General Assembly to consider systemic improvements in the way Maryland does business: repealing prevailing wage and allied featherbedding laws; authorizing public-private partnerships in school and other public construction; downsizing, then restructuring the state work force, and abolishing lifetime civil-service tenure as Georgia did under then governor Zell Miller; allowing competition in the school system aiding productivity while tailoring spending to performance; and outsourcing state work wherever quality and prudence would indicate.

MTA would be grateful if you would make our legislative recommendations on HB 1449 a part of your permanent record of hearing. Please call MTA whenever we can be of help in your consideration of Maryland tax and related regulatory matters.