Apparently not to the Maryland General Assembly.
We’re all familiar with the computer services tax slated to go into effect on July 1st. Those of us who pay attention also know that this will be a job-killing levy that, like the cigarette tax increase, won’t come close to the promised revenue amount. If you believe Tim at Gunpowder Chronicle, we’re already seeing efforts by Pennsylvania to swoop in and take the computer business out of Maryland.
So there are a number of legislators on the other side of the aisle who are having second thoughts about this. (The ones on my side rejected it on first thought, but sadly we were outvoted – a situation which needs to be addressed two years hence.) This led me to an article in today’s Baltimore Sun by Gadi Dechter which brought up the idea of repealing the tech tax, but replacing it with an additional income tax levy on the rich. It got the backing of Senate Budget and Taxation chair Sen. Ulysses Currie:
“I support (the shift from tech tax to income tax). There’s a strong feeling that if we can find an alternative revenue source, we should repeal the computer services tax.” (Emphasis mine.)
You are exactly half right, that last half is perfect. It’s that alternative revenue source that bothers me.
When the rest of us come up short on our monthly expenses, we sit down and go through our budget and do some hard thinking about what cuts we can make. There’s a lot of folks out there who are facing the choice between paying their mortgages and paying on their credit cards and utility bills. I suppose that we average people do have opportunities to find alternate revenue sources, but taking a second job (assuming you can find one) can be detrimental to family life and robbing banks is illegal in all 50 states.
I realize that the state has a pretty significant budget shortfall, probably because they were stupid enough to honestly believe that people would gladly take it in the shorts to pay higher taxes on cigarettes, an increased sales tax, and other levies which shot upward. Regardless, what’s done is done and we’re already seeing the results. More evidence of the state’s shortsightedness will occur as the year progresses and companies vacate Maryland in an effort to avoid the computer services tax where they can.
Even the Maryland Republican Delegates who conceded that all the additional taxes that took effect in January were necessary to balance the FY2009 budget drew the line at balancing the budget on the backs of the computer services industry. What I haven’t seen yet from the Democrats is the justification for all of the programs, jobs, pay raises, and other items they felt necessary to increase in next year’s budget, which they spend OUR hard-earned tax money on, and somehow I doubt we’re going to see it either. They’ll just continue on their merry way until enough people get fed up with it.
Let me step off my soapbox to make another point. As always, the predictions on revenue from the income tax increase, which would raise rates from the current 5.5% on those who make over $750,000, are viewed with rose-colored glasses. The state expects $230 million from this “temporary” tax for FY2009, which replaces the $200 million presumed to come from the tech tax. My quick and dirty math based on the revenue expected makes it sound like there’s about 30,000 people who would pay this extra tax. Granted, an additional 1% tacked on for millionaires and 3/4% for those who fall just short isn’t something that a lot of folks reading this are going to have to deal with, but it’s the principle to me as well. Personally, I think we all should pay an equal rate regardless of income.
But if you’re making that much money, would it be that tough to pull up stakes and relocate to a more tax-friendly state like Virginia or Delaware? While this is, as written, a “temporary” tax slated to expire in 2012, I’m not going to be the one who bets the farm that it would be allowed to go away at that point. And once capital flees it’s pretty tough to bring back.
Instead, why not look for more cuts in programs like the rest of us have to with our budgets? In these fairly lean times, the time’s not right for the state to try and be all things to all people. Unfortunately, it’s dominated by a political party who wants to be that and more knowing that by doing so, or at least impressing on enough people that they’re making the effort, they can maintain their power almost perpetually.
Crossposted on Red Maryland.