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Three Facts About Maryland’s Special Session


Brent Mead
May 15, 2012

Last month, the clock struck midnight on the Maryland Legislature’s plan to pass a broad-based income and excise tax hike. However, because officials in Annapolis really want to confiscate more of their constituents’ money they reconvened for a special session this week.

Here are some quick facts on O’Malley’s job-killing plan;

  • Despite the “doomsday” moniker, the current budget increases spending by $700 million compared to last year. The $500 million in “cuts” cited by Governor O’Malley are a decrease in proposed spending increases, not actual cuts in spending. If Maryland simply held spending level with last year there would be no need to raise taxes.

    The Tax Foundation produced a report on the budget fallacies being perpetuated by the Governor and his legislative allies. Spending has increased every year under O’Malley and shows little sign of abating.

  • On the income tax side, the proposal would raise levies on single filers earning more than $100,000 and joint filers earning more than $150,000. According to the Tax Foundation study, for a couple earning $250,000 in Maryland this means they would pay almost $1,000 more per year in taxes. Additionally, by remaining in the state, the couple would pay higher taxes than in either the District of Columbia or neighboring Virginia.  

    Maryland taxpayers have been to this rodeo before. In 2008, after the first millionaire’s tax went into effect the state saw an exodus of high earners. The results of the current proposal will be no different.

  • Finally, the raising excise tax rates on little cigars and smokeless tobacco will only punish poorer residents, who are more likely to use such products, and will fail to raise revenue. For proof of this phenomenon, in 2009, Washington, D.C. raised its cigarette tax from $2.00 to $2.50 per pack. The District projected the new tax would generate $45 million in revenue, about 20 percent above 2009 levels. Instead, revenues came in $12 million below projections and $4.2 million lower than before the tax was imposed.

    The proposal would also have a real negative effect on small businesses throughout the state. One store owner in Annapolis said; "It will kill the business, and in the end result, it would kill my business," Keller said. "(Our customers) say they'll just go somewhere else."

While Assembly leaders are trying to rush this tax hike through with minimal public input you can still reach out to your elected officials and urge them to oppose these ill-conceived tax increases.


 

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