MD Democratic follies
If you hadn't heard, the state is facing a massive budget shortfall, and the answer was to hold a special legislative session to debate a tax increase and slots gambling finally being allowed. In the run up, the MD Dems' answer was to claim they were going to "fix" the "regressive" tax system in MD (AKA a flat tax). "The rich" were supposed to get soaked with a 1-2% tax increase.
The only problem is that "the rich" were concentrated in Montgomery County, home of MS far-left crackpotism. This scared the MoCO COunty Executive so much that he lobbied everyone in the MD Legis not to pass the tax increase because all those "rich people" would just pack up and move to NoVA!
So, guess what?
A sharply divided Maryland Senate approved a $1.4 billion annual tax increase yesterday, the largest component of a plan to close a gaping state budget shortfall that Gov. Martin O'Malley is pushing lawmakers to adopt in a special legislative session now two weeks old.
The bill calls for raising the sales, tobacco, corporate income and vehicle titling taxes and overhauling the state's income tax brackets. High-income earners would pay more, but in a nod to concerns raised by Montgomery County officials, the Senate scaled back two top income tax rates proposed by O'Malley (D).
As we say in econ, "there ain't no such thing as a free lunch." MD's budget has to get balanced with money from somewhere. And lookie where it's going to come from:
O'Malley promise on taxes erased
Lawmakers remove low earners' breaks
By Andrew A. Green
November 13, 2007Gov. Martin O'Malley aimed his pitch for raising some taxes at the same "working families" he wooed in last year's campaign. He promised that he had found a way to resolve Maryland's projected $1.7 billion budget shortfall that would place the burden on the wealthy and big corporations. The vast majority of Marylanders, he promised, would actually come out ahead.
But after a series of amendments the state Senate adopted last week, that appears to be in doubt. The House of Delegates voted to restore some of O'Malley's promised progressivity, but even plan supporters acknowledge that working families are likely to end up paying the same amount or more in taxes.
. . . .
Both the Senate and the House eliminated the property tax cut. The House added some new tax breaks for lower-income workers, but the benefits wouldn't necessarily be as big as the governor proposed. And a $50 sales tax rebate for families earning less than $30,000 a year that was in O'Malley's plan appears to be dead.
For a family earning $40,000 a year, O'Malley's plan would result in tax savings of $58. That family would pay $7 more a year under the House plan and $87 more a year under the Senate plan.
A family earning $75,000 a year would pay an extra $66 under O'Malley's plan, not counting the property tax cut that he was pushing. If that family owned a $220,000 home, it would break even under his proposal. That family would pay an extra $83 under the House plan and $166 more under the Senate plan.
The very wealthy - families with incomes of $750,000 a year - would be hit the hardest by O'Malley's plan. The governor's proposal (not counting the property tax break) would have cost them about $5,403. The House and Senate plans would add $4,405 and $2,253, respectively.
A big impetus for the changes to O'Malley's plan was the objection of Montgomery County lawmakers, whose constituents would have picked up most of the tab.
Montgomery County Executive Isiah Leggett, a Democrat, said he worried that O'Malley's plan would prompt top earners to relocate to Northern Virginia, where the income tax rate is lower.
"It would harm our efforts to preserve and protect our low-income families because we need revenue from the top," Leggett said. "If we do not continue to attract these people, it adversely affects those at the bottom."
Way to go, MD Dems! Cave on your principles when it affects YOU!