Three Weeks and a Cloud of Taxes

Legendary Ohio State football coach Woody Hayes once described his offense as, “three yards and a cloud of dust.” Paraphrasing Hayes, we can sum up the end of the special session as “three weeks and cloud of taxes.”

For the second weekend in a row, the House of Delegates held key votes in the dark of night after most of the press had left and most us had gone to bed. Delegates were voting on versions of bills handed to them minutes before the vote, with no idea of what they were voting on.

Supposedly “conservative” Democrats abandoned concern for their constituents, by voting for the tax increases before they opposed them. Five Republicans, who should know better, voted for a flawed slots amendment. Had just three of flimsy five showed a modicum of backbone we could have been discussing the collapse of the special session and a defeat of largest tax grab in Maryland history. Instead, taxpayers got hosed and unscrupulous legislators offered lame excuses. Delegate James King R (R District 33A) of Anne Arundel County deserves special opprobrium. The man can’t even offer a cogent or honest assessment as to why he voted for the slots amendment.

WBAL details the higher taxes the special session hath wrought:

INCOME TAX:
Maryland's income tax rates would be restructured for the first time in 40 years. Now, the income tax rate is mostly flat, because people who earn more than $3,000 in taxable income pay a 4.75 rate. A compromise between the House and Senate on Gov. Martin O'Malley's proposals would create three new tax brackets. The new brackets are:
- 5 percent for single filers who make more than $150,000 and joint filers who make more than $200,000.
- 5.25 percent for singles making more than $300,000 and joint filers making more than $350,000.
- 5.5 percent for singles and joint filers making more than $500,000.
PERSONAL EXEMPTIONS
- Personal exemptions would be increased by $800 for single taxpayers who make less than $100,000 a year and joint filers who make less than $150,000 a year in federal adjusted gross income.
SALES TAX:
Maryland's sales tax would rise from 5 percent to 6 percent. The sales tax also would be extended to computer services - a key change that would raise an estimated $190 million. The computer services that would be affected include support services for computer systems or data processing facilities, custom computer programming, consulting services regarding computer systems design, and computer disaster recovery services.
TOBACCO TAX:
The state's tobacco tax would rise from $1 a pack to $2 a pack. A Senate proposal to require the tax to be reduced proportionate to any federal tax increase would be eliminated.
SALES TAX HOLIDAYS:
Would be delayed until 2011.
CORPORATE INCOME TAX:
The corporate income tax would rise from 7 percent to 8.25 percent.
COMBINED REPORTING:
A proposal aimed at making corporations pay more taxes in the state by preventing them from moving profits to out-of-state-subsidiaries would be put off and studied.
CONTROLLING INTEREST:
Would close a corporate loophole enabling corporations to skip transfer taxes and real estate recordation taxes, or 2 percent of sales prices
paid by residents and small businesses.
TITLING TAX: The vehicle titling tax would be increased from 5 percent to 6 percent with full trade-in allowances.

Also, no one in the media is reporting that the Budget Reconciliation Act will raise our electricity bills even more. Thrown in with the tweaking of state education funding the BRA allows counties to levy a property tax on electricity generating companies. Counties can increase that assessment by 65% in 2008, then increase it another 60% in 2009, and 55% in 2010. Martin O’Malley singed this bill earlier this afternoon. He broke the same campaign promise, not once but twice.

In all it appears to be about $1.3 billion total.

The flawed slots referendum now goes on the ballot for the 2008 election. The plan is flawed because: a) the state constitution is not the place to enshrine our right to play video Wheel of Fortune; b) a slots license auction. like the GOP plan, could have generated $800 million up front; c) if the citizens of Maryland approve the referendum, they will have constitutionally enshrined a political payoff to some of the governor’s major financial contributors, even one who retired O’Malley’s campaign debt.

I want slots, hell I want full table gaming in Maryland. However, enshrining slots in the constitution and using them to repay the governor’s political patrons is not the way to do it.

Contrary to Andrew Green and the Baltimore Sun the legislature did not issue a “directive” to the governor to make $550 million in cuts to the budget. The bill merely makes recommendations to the governor, which he is not legally bound to make. Does anyone seriously think this governor or this legislature is actually going to cut spending? This is the same dishonest crew that label, reducing the rate of spending growth, “cuts.” Reductions, by the way, that could have closed the deficit WITHOUT raising taxes.

The special session was not merely about “deficit reduction.” The General Assembly proved the point I made in the previous paragraph, by creating additional spending on healthcare and programs to clean up the Chesapeake Bay.

I await the litany of Pravdaesque and brown nose opinion pieces lauding O’Malley’s leadership for making tough decisions.