Just Say No to Both

Sorry, Adam. I gotta disagree with you on this one. The computer tax is a terrible tax. However, I think the rest of the legislature must have started chuckling to themselves when Sen. Rob Garagiola proposed the surcharge on millionaires to replace it. Here's why I think Sen. Rich Madaleno is right and neither tax is a good idea.

1. You're replacing one tax which targets Montgomery County with another that does exactly the same. No wonder the rest of the legislature is willing to go along if Montgomery's delegation says yes.

2. The recession is just beginning. Unlike the federal government, Maryland cannot just endlessly borrow more money to cover expenses since it must balance its budget. Do we really want to do all the painful tax increases at once? Perhaps legislators ought to take another look at the budget or some of the other alternatives you've proposed as well.

3. Del. Tom Hucker's argument is politically appealing in the Democratic primary but doesn't make economic sense for the State. While it is hard for people to escape higher federal taxes by leaving the U.S., getting out of Maryland isn't too hard. At what point do the very wealthy start retiring even earlier to Florida or moving across the Potomac to Virginia. Just because they can afford to pay the tax doesn't mean that they are going to pay it. And I don't want to bash the very wealthy: I like having wealthy taxpayers live here--even at lower tax rates they still pay a heck of a lot which means others can pay less or we can have more services.

4. The federal tax cuts which favor the wealthy referred to by Del. Hucker are soon to end under existing federal law--the Republicans set it up that way because it is the only way they could claim that they would balance the budget over the long term. This shift becomes even more certain with Democratic majorities in Congress and if a Democratic president is elected next year.

5. Progressive or regressive is measured not at each level of government but the whole scheme of taxation. State taxes tend to be much less progressive than federal taxes precisely because the states compete for them. Moreover, you have to compare how progressive states are not just in terms of taxes but in spending. We do well here.

6. I don't buy that the governor's tax package was incredibly regressive (or necessarily regressive at all). Yes, the sales tax went up with wealthy people tend to spend more and pay more of it even if it ends up being somewhat regressive. However, the income tax change was progressive. The sin taxes are voluntary, after all.

In short, Rich is right on this one. Interestingly, both Rob and Rich deserve kudos for taking stands against their immediate political self-interest. I can't imagine that a surcharge on the wealthy gets Sen. Garagiola that many kudos in his affluent and marginal legislative district. Similarly, Rich represents a very Democratic district and doesn't gain any points in the critical Democratic primary for suggesting that there are costs to the same proposal.