NCPA - National Center for Policy Analysis

TAX 'FAIRNESS' IN ACTION

October 1, 2007

Every state has its problems, but Maryland, where Gov. Martin O'Malley has been undertaking something close to a tax-increase-a-day tour, seems particularly vexed, says the Wall Street Journal.

Consider:

  • In Ellicott City he proposed raising the sales tax to a rate of 6 percent from a nickel.
  • The next day in suburban Baltimore, he unveiled his plan to raise the top income tax rate to 6.5 percent from 4.75 percent.
  • Last Wednesday in Landover he called for a doubling of the cigarette tax to $2 a pack.
  • He has also endorsed a 1 percent hike in the state corporate income tax to 8 percent; new commercial real estate taxes; and a 12 cent hike in the gasoline tax to 35.5 cents a gallon.
  • The Tax Foundation says Maryland already has the 23rd highest tax burden among the 50 states, but the Governor seems to be aiming for the top 10.

In all, O'Malley hopes to wrench $2 billion a year from Maryland's workers -- in the name of filling a $1.5 billion gap in the state's $30 billion budget.  The extra $500 million will finance new spending.

"This is the biggest tax increase in Maryland history, by far," says Christopher Summers, president of the Maryland Public Policy Institute.  But like a dentist with a drill in his hand, O'Malley says this won't hurt a bit.  He claims his "reforms" will reduce the tax burden on 95 percent of state taxpayers, thanks to a lower tax rate on incomes below $15,000 and some tax credits.  But of course everyone will pay the higher sales tax, unless they decide to shop in neighboring Delaware, which has no sales levy, says the Journal.

Source: Editorial, "Tax 'Fairness' in Action," Wall Street Journal, October 1, 2007; and J. Scott Moody and Wendy P. Warcholik, "The Risks of 'Tax Reform' In Maryland," Maryland Policy Report, September 20, 2007.

For Wall Street Journal text:

http://online.wsj.com/article/SB119120190400144318.html 

For report:

http://www.mdpolicy.org/research/pubID.168/pub_detail.asp

 

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