Laying the groundwork for new taxes?
Posted by Ed C on Thursday, November 16, 2006
From the Baltimore Sun: State’s fiscal woes to linger
“Structural deficits require structural solutions, and as a result, everything is
going to have to be on the table,” said O’Malley spokesman Steve Kearney
Everything is on the table? Setting the dial on my customized DeLorian way-back
machine to a short time in the future; here is the transcript from the next budget
[O’Malley] So, any suggestions? Please don’t hold back, everything is on the table.
[unidentified speaker] We should consider cutting some programs like [unintelligible]…
[O’Malley] Stop, you made my soda come out my nose.Okay, that was a good one, but seriously, do you think we can sell both an income tax and sales tax increase at the same time?
When I moved to Maryland in 1985, the topic at the time was how the State could spend the “Windfall Tax Gains” that the state was going to get because of tax restructuring by Ronald Regan’s administration. It took me a while to figure out what they were talking about.
I came from PA where the State Tax Form was literally a post card with something like 5 lines.
|1)||How much did you make||_________|
|2)||Multiply (1) by 0.032||_________|
|3)||How much have you paid:||_________|
|4)||If 2 is larger than 3, subtract 3 from 2||_________ Send this amount in.|
|5)||If 3 is larger than 2, subtract 2 from 3.||_________ This is what you get back|
That was it.
It took me awhile to figure out that the MD tax code was structured similar to the Federal tax code and that when deductions for things like car loans, credit card debt… were eliminated, Marylanders were going to be paying more (much more) in state taxes if the Maryland tax code remained the same. The legislature would not need to do anything, and they would just get all of this “free money.”
And the fight was how to spend it.
Very little discussion of changing the MD state tax code so that the changes would be revenue neutral. And as I recall, any such suggestions were also referred to as “giving back”. The state was going to be taking more of our money and if we were lucky they might find it in their heart to let us keep a few crumbs.
Faced with a choice of cutting programs and delaying new initiatives or raising taxes the natural tendency of a Democratic Governor and Legislature will be to increase taxes. They mean well, so we should be happy with what we are allowed to keep. Right?