Maryland Governor Martin O'Malley: Barack Obama, Jr.
Governor Martin O’Malley has transformed Maryland into one of the most hostile places for taxpayers to live. With new taxes on income and smokeless tobacco passed into law after the May, 2012 special session, Maryland is quickly becoming the most taxed state in the country.
During O’Malley’s current term in office (2007 to 2010*) 232,000 taxpayers have fled Maryland taking $13 billion in income with them.
Americans for Tax Reform believes that Gov. O’Malley’s left-wing, tax-and-spend policies in Maryland give the American people an inside look into how Barack Obama will act if he is re-elected to a second term.
During the 2008 Presidential election, then candidate Obama promised not to raise taxes on any family making less than $250,000 a year. Without a word of resistance from the President or Maryland’s Congressional Democrats, Gov. O’Malley has moved the goal posts and redefined “rich” as any individual making more than $100,000 – or couples who are making more than $150,000 – a year.
Below, ATR has compiled a comprehensive list of tax hikes Gov. O’Malley has enacted as Governor of Maryland:
History of Tax Hikes
2012 Special “Tax Hike” Session:
• Tax hike on smokeless tobacco and “Little Cigars”: $5 million
• Elimination of Telecom Property Tax Credits (Corporate Income Tax): $7.4 million
• Elimination of personal exemptions (Individual Income Tax): $51.7 million
• Income tax hikes on individuals making over $100,000 and couples over $150,000: $195.6 million
2012 Regular Legislative Session:
• Flush tax hike: $53 million
2011 Regular Legislative Session:
• Highway and Bridge toll increases: $90 million
• Vehicle titling tax hike from $50 to $100: $52.4 million
• Hospital provider tax: $390 million
• Alcohol sales tax hike from 6-percent to 9-percent: $84.8 million
2008 Regular Legislative Session:
• The Millionaires Tax pushes top marginal rate from 5.5-percent to 6.25-perent: $154.6 million
2007 Special “Tax Hike” Session:
• Senate Bill 2 - Real property transfer tax hike: $14.1 million.
• House Bill 5 – “Tip Jar” tax hike, 20-percent “Admissions and Amusement” tax: $8 million
• Tobacco tax hike from $1 per pack to $2 per pack: $133 million
• Vehicle excise tax hike: $36.9 million
• Vehicle titling tax hike (bumped from $23 to $50): $23 million
• Sales tax hike from 5-percent to 6-percent: $603.4 million
• Income tax hike with new rates between 4.75-percent and 5.5-percent: $191.3 million
• State corporate income tax hike from 7-percent to 8.25-percent: $118.6 million
2007 Regular Legislative Session:
• Eliminated use of captive real estate investment trusts for income tax purposes: $10 million
• Since taking office in 2007, Maryland Governor Martin O’Malley has enacted 19 major tax hikes amounting to a total of $2.2 billion in tax increases.
• In that same period of time, Governor O’Malley has increased spending by over $1 billion each fiscal year.
• The National Governors Association and National Associations of State Budget Officers’ 2011 fiscal study of the states shows Maryland to have the highest rate of budget growth in the mid-Atlantic region and 7th overall nationally.
• In the past year Governor O’Malley has tackled social issues that are important to liberal Democrat voters, including Gay Marriage and the DREAM Act – checking off the requirements for his own presidential ambitions in 2016.
• Governor O’Malley continues to push for a multi-billion dollar wind farm project off the coast of Maryland that would cause higher costs for utility providers and consumers alike.
*The IRS has not released tax migration data for 2010-2011. Governor Martin O’Malley is ineligible to run for reelection in 2014 due to term limits.
The Post Mortem on Maryland's Special Tax Hike Session
The Maryland House of Delegates passed the Budget Reconciliation and Financing Act (BRFA) on Wednesday by a 77 to 60 vote – resulting in a $300 million tax increase on Marylanders. Governor Martin O’Malley will surely sign the bill, checking off another item to impress union bosses and big government liberals with, in a lead up to his 2016 presidential campaign.
The BRFA extends the concept of the infamous Maryland millionaires tax to single filers making over $100,000 a year and joint filers making over $150,000 a year. Then candidate Barack Obama promised as President that he would not raise taxes on anyone making under $250,000 a year. Maryland Democrats have decided to move the goal posts and redefine “rich” as being anyone who makes over $100,000 a year – including many of Maryland’s small businesses and employers.
Besides increasing tax rates; the BRFA phases out many exemptions at an accelerated pace. Low tax states like Virginia, Florida, and Texas must be looking very appealing to Maryland taxpayers and employers right about now.
In addition to job killing and population draining income tax hikes, Maryland Democrats managed to insert two tax increases on tobacco. The tax on “little cigars” will jump from 15-percent to 70-percent of wholesale, and the rate on smokeless tobacco will rise from 15-percent to 30-percent.
The tax hike on smokeless tobacco – defended by Democrat lawmakers because of tobacco’s health implications – flies in the face of actual science. If Maryland’s lawmakers were really concerned about Marylanders’ health and not finding new sources of revenue, they would not be seeking to create tax parity between smokeless tobacco and cigarettes. Rather, they would be trying to adopt a policy of Tobacco Harm Reduction. By increasing the tax on smokeless tobacco, Maryland Democrats are perpetuating the unfortunate and detrimental misconception that the use of smokeless tobacco is as harmful as smoking – and as a result may be encouraging more Marylanders to continue to smoke instead of switching to far less harmful products.
The fact is, every year under Governor Martin O’Malley, state spending has increased by $1 billion or more. The supposed “Doomsday Budget” passed at the end of this year’s regular legislative session was anything but “doomsday.” It was a $700 million increase from the previous year’s budget and left intact all of Maryland’s social programs, education, and government services.
With the tax increases now in place, the Tax Foundation has calculated that a two child family with a $250,000 income would be paying nearly $18,000 a year in taxes. That’s almost $1,500 more than in Washington, DC, and $6,500 more than in Virginia.
If anything, Maryland’s “Doomsday Budget” was actually the BRFA and its bevy of job killing tax hikes.
Maryland's Special Tax Hike Session Kicks Off Today
Evidently a spending increase just shy of $1 billion is not enough for Governor Martin O’Malley and the Democrat leadership in Maryland’s General Assembly. Today, May 14, lawmakers will return to Annapolis to pass the Governor’s tax hike proposal, allowing Gov. O’Malley to increase spending by over $1 billion from last year’s budget.
Under Gov. O’Malley’s proposal, about one in five Marylanders will see their taxes rise. WBAL is reporting that the proposal will set new income tax rates on Marylanders making over $100,000 a year. However, there is a potential House-Senate compromise that could lower the threshold to just $75,000 a year.
Maryland taxpayers, small businesses, and consumers should also be wary of the possibility of a 70-percent tax increase on smokeless tobacco and cigars. These hikes will hurt consumers and employers; driving jobs and small businesses from the Chesapeake Bay State.
When Governor O’Malley signed a new millionaires’ tax into law in 2008, Maryland’s millionaires fled the state – tax returns indicate that one-third of those making over a million dollars left Maryland between 2008 and 2009. Following the millionaire’s tax catastrophe, O’Malley promised to end the state’s $1 billion structural deficit through spending cuts alone, yet he’s back at the tax hiking game.
Maryland’s budget is a mess. Spending has grown by $1 billion or more each year that Governor O’Malley has been in office. If the state had capped spending to the rate of inflation and population growth between the years 1999 and 2009, the state would have spent $34.2 billion less, more than enough to wipe out the structural deficit and cut the state’s burdensome tax regime. Instead, Governor O’Malley hiked taxes by more than $1 billion in 2007, instituted the millionaires’ tax in 2008, and now wants to raise taxes again by over $300 million. It is self-evident; Maryland has a spending problem, not a revenue problem.
Eileen Norcross of George Mason University’s Mercatus Center has released an excellent report, “The Appearance of Fiscal Prudence,” explaining how Maryland’s budget process has only exacerbated out of control spending. The Spending Affordability Committee, a special committee within Maryland’s General Assembly, draws up the budget each year. The committee’s rules have been cast aside, causing what was supposed to be guidelines instituting a spending cap to now be considered the state’s spending target.
Additionally, Governor O’Malley has claimed that this budgeting process has created $7.5 billion in spending cuts, but that is just not true. Again, each year that Governor O’Malley has been in office, the budget has ballooned by $1 billion or more. A study released by the National Governors Association and the National Association of State Budget Officers shows that Maryland has the highest general fund budget growth among the Mid-Atlantic region, and it ranks 7th overall nationally.
Americans for Tax Reform encourages Maryland residents and taxpayers to contact their state lawmakers and Governor O’Malley and voice their opposition to ALL the new proposed tax increases. You can find your legislator here.
A Tax Hike Is Not A Spending Cut
The Illinois Policy Institute has produced some excellent analysis of Governor Pat Quinn’s budget gimmick and the Illinois House budget resolution containing a massive $350 million tobacco tax hike, noting: “A tax hike is not a spending cut.”
Below is the Illinois Policy Institute’s open letter to the Illinois General Assembly opposing the tobacco tax increase:
Both Gov. Quinn’s budget proposal and the House budget resolution called for a $2.7 billion reduction in Medicaid liabilities. Similarly, the governor and the General Assembly have committed to reducing the tax burden for working families.
Yet Gov. Quinn’s recently released Medicaid plan does not meet either goal. The governor identified only $2 billion in Medicaid spending reductions, the bulk of which is steep provider cuts. Unbelievably, he then called for additional tax hikes to raise $700 million in new revenue ($350 million from a tobacco tax hike and a $350 million federal “match” to be added to the national debt). This is without a doubt a tax hike on Illinois’ working class – the average smoker’s household income is under $36,000 a year.
A tax hike is not a reduction in accrued obligations. It is not reform. It is more taxing and more spending, plain and simple.
Members of the General Assembly who reject the harmful “tax and spend” habits of the past have good reason to reject this plan. Falling short on spending reforms while hiking taxes on Illinois’ poor and disadvantaged is not a winning combination.
A budget framework that rests upon this toxic combination should be put aside in favor of a plan that finally treats taxpayers with the respect they deserve.
Executive Vice President
In addition to their open letter, the Illinois Policy Institute released two pages of analysis on the proposed tobacco tax increase:
In February, Gov. Quinn told lawmakers that in order to rescue Illinois’ Medicaid program, the state would need to “reduce expenditures in the program by $2.7 billion” for fiscal year 2013. But the plan he released in April does not reduce expenditures by $2.7 billion as promised.
Instead, his proposal reduces Medicaid spending by only $2 billion, the bulk of which comes from cuts to reimbursement rates for doctors and hospitals who serve Medicaid patients. In order to fill the gap between his plan and his target, he proposed hiking taxes on cigarettes to raise nearly $700 million in new revenues. Worse yet, these taxes are aimed primarily at the lower and working classes, with the average smoker’s household income falling below $36,000 per year.
Click here to find your Illinois legislator and tell them that tax hikes are not spending cuts and to oppose any increase in the state’s tobacco taxes.
Baltimore City Council Considers a 150% Tax Increase on Soda
Members of the City Council will hold a hearing on Wednesday to consider a new and unnecessary 150% soda tax increase.
Such a massive local tax increase on soda not only means higher costs for the consumer, but lost jobs as well. This tax hike, if passed, could very well result in layoffs at the Canada Dry bottling plant in Baltimore County and its distribution center in Glen Burnie at a time when the local economy desperately needs job creation and can ill-afford needless job destruction. A spokeswoman for Canada Dry recently told the Baltimore Business Journal that increasing the soda tax from two to five cents would cause an additional 10-percent decline in sales in Baltimore.
Unfortunately, this has happened before. When the original 2-cent soda excise tax was enacted in 2010, Pepsi found that it was no longer cost-effective to make soda at their Baltimore facility and was forced to lay off 77 workers as a result. In 2011 employers called on the city to repeal the tax to no avail. What’s that they say about the definition of insanity?
Baltimore has an overspending problem, not a revenue problem. The tax code should not be used to pick winners and losers. Not only is raising the soda tax unsound policy, it is even more unwise in light of the fact that the largest federal tax increase in U.S. history will hit hard working Baltimore taxpayers in less than nine short months.
ATR urges Baltimore residents to call their representative on Baltimore City Council and Mayor Stephanie Rawlings-Blake and tell them NO NEW TAXES ON SODA.
Office of Mayor Stephanie Rawlings-Blake
Baltimore City Council
Office of the President
James B. Kraft
Brandon M. Scott
Rochelle “Rikki” Spector
Sharon Green Middleton
William “Pete” Welch
William H. Cole IV
Mary Pat Clarke
Unintentional Fiscal Sanity in Maryland?
The Maryland General Assembly wrapped up their 2012 legislative session in chaotic fashion last night. Democrat powerbrokers in the General Assembly and Governor Martin O’Malley had been pushing for a massive new spending proposal funded with tax increases on Marylanders’ income, smokeless tobacco and cigars.
Fortunately for Maryland taxpayers, the Democrats in the General Assembly were unable to reconcile their differences over the budget. Instead, Maryland's budget that actually cuts $500 million from state spending in 2013 in order to balance.
While job-killing tax increases on income and tobacco were avoided, Democrats in the General Assembly did force through an increase in the state’s “flush tax” from $30 to $60.
Though the new Maryland budget is a step in the right direction, Senate President Thomas V. Mike Miller, Jr. has already floated the prospect of a special session called by Gov. Martin O’Malley with the goal of finalizing a bloated spending package laden with the aforementioned tax increases on income, smokeless tobacco, and cigars – among other things.
Click here to contact Governor O’Malley and ask him to let the Maryland General Assembly adjourn as planned and not call a special session.
Virginia State Senator Richard Saslaw Wants Higher Taxes, Gets It Wrong on the Pledge
Appearing on PBS affiliate WVPY in Harrisonburg, Va. Virginia State Senator and Democrat Minority Leader Richard Saslaw (D – Fairfax) blamed the Taxpayer Protection Pledge and it’s signers in the House of Delegates for Virginia’s transportation woes. Senator Saslaw stated, “The no tax pledge in the House has prevented us from doing anything with roads. Pretty soon it's [The Taxpayer Protection Pledge] going to start to weigh on our ability to attract businesses to the Commonwealth.” Saslaw added later in the interview, “I don't think any thinking person would sign that [The Taxpayer Protection Pledge].”
Senator Saslaw’s comments represent what is wrong with Virginia Democrats. They not only want their cake, they want to eat it too – and have hardworking Virginia taxpayers and businesses pay for it. In his nearly thirty-two years in the Virginia State Senate, Richard Saslaw has been a vocal advocate of raising the gas tax, among other taxes, all-the-while voting for the state’s ballooning budget – especially spending on transportation and education.
In Saslaw’s nearly thirty-two years in the State Senate, Virginia has overspent at an unsustainable rate. Between 1981 and 2009, the Commonwealth of Virginia has spent 378.5 billion taxpayer dollars. If spending had been capped by the rate of inflation and population growth, lawmakers in Richmond would have spent one-third less, saving Virginia taxpayers $113.7 billion. In Saslaw’s nearly thirty-two years in the State Senate, Virginia has overspent at an unsustainable rate.
This year alone, Senator Saslaw and his fellow Democrats in the State Senate refused to pass Governor Bob McDonnell’s budget. Instead, they forced the Senate to restore what were responsible and badly needed spending reductions – kicking the can down the road for future generations to pay for the Commonwealth’s overspending problem.
“Virginia Democrats are like a broken record, whether it is Senate Minority Leader Richard Saslaw or former-Governor Tim Kaine – tax and spend is all they know how to say,” stated Grover Norquist, President of Americans for Tax Reform, “Senator Saslaw’s latest tantrum is the result of him being unable to cobble together a tax increase on gasoline and soak the taxpayers of Virginia for more of their tax dollars. While Governor Bob McDonnell is trying to promote economic growth in Virginia, Senator Saslaw is busy trying to drive businesses out of the Commonwealth with higher taxes.”
Norquist continued, “Senator Saslaw is not alone in his support for Left-wing tax and spending policies. A few Senate Republicans have also bought into the higher taxes and higher spending ways of Senator Saslaw and former-Governor Tim Kaine. Senate Majority Leader Tommy Norment, Senator John Watkins, Senator Harry Blevins, Senator Walter Stosch and Senator Frank Ruff voted for increasing the gas tax this year. Senator Frank Wagner, a Republican, even sponsored the bill.”
OK House Committee Votes Against Preventing A Tax Increase
The Oklahoma House of Representatives’ Energy and Utility Regulation Committee turned its back on Oklahoma’s wireless phone subscribers and the 30-percent of wireless only households by voting down 18 to 6 HB 2737. The legislation would have capped the amount of money that goes to subsidize phone service in rural areas and prevented a tax increase on about 3.1 million Oklahomans.
Oklahoma ranks 18th in national tax burden on wireless with a 15.79-percent combined local, state, and federal tax on cellphone service.
Instead, the House Energy and Utility Regulation Committee sided against lower, less burdensome taxes by voting down HB 2737.
What do you think, should Oklahoma's Universal Service Fund be capped, preventing new tax increases on wireless service?
Washington State's Gimmick Budget
Democrats in Washington State’s House of Representatives have unveiled their budget proposal – HB 2127 – which they claim closes a $1 billion budget shortfall without raising taxes or borrowing money. In reality, the budget does raise taxes, and relies on accounting gimmicks to solve their $1 billion spending problem.
The budget proposal, along with SB 2728, would allow counties in Washington State to add a 6-perent utility tax that in many instances would wind up on taxpayers’ cell phone bills. Washington State already has the 2nd highest national tax burden on wireless, with a combined state and federal rate of 23-percent. An added 6-percent utility tax would impact the 6 million wireless subscribers in the Evergreen State – it should also be noted that over a quarter of households in Washington are wireless only.
In addition to opening the gates to burdensome county-level taxes, the Democrats’ budget defers certain payments to education until the next two-year budget cycle, kicking the can down the road and dodging the growing need to address the state’s out-of-control spending problems in an election year.
What the House Democrats have proposes is not a budget, but a rather a placebo, getting them out of having to make tough decisions in an election year and setting them up to pass what will probably be a massive tax increase in the next budget cycle.
What do you think? Are Washington State Democrats kicking the can down the road?
OK Gov. Mary Fallin Releases Bold Tax Reform Plan
Oklahoma Governor Mary Fallin, in her State of the State Address, outlined a bold plan for tax reform focused on reducing rates and consolidating Oklahoma’s seven tax brackets.
The plan would end Oklahoma’s complicated seven bracket income tax structure that begins taxing on the first penny any Oklahoman earns, instead replacing the structure with three brackets – Oklahoman’s making below $15,000 a year would pay a 0-percent rate, those making under $35,000 would pay a 2.25-percent rate, and those making $35,000 and above would pay a 3.5-percent rate.
The Tax Foundation ranks Oklahoma as 38th in the nation in terms of the individual income tax rate. Reducing the top statutory rate to 3.5-percent – reduced from 5.25-percent – would give Oklahoma the second lowest top statutory rate in the region. Lower than Arkansas, Kansas, Louisiana, Nebraska, and New Mexico. Only Texas would have a lower rate – the state does not have an income tax.
The Governor’s plan calls for further reductions in the income tax after 2013, with reductions of a quarter point every year that Oklahoma hits a revenue growth trigger of 5-percent – the eventual goal being the reduction of all income tax rates to 0-percent.
To read the Governor’s tax plan, click here.
There is also talk in Oklahoma of a legislative proposal lowering the universal service fund tax rate on phones. The combined state and local tax for wireless services reaches above 10 percent, one of the highest in the nation, and is over twice as high as the sales tax rate of 4.5 percent. This would help create a low and flat tax structure for one of the higher taxed services in Oklahoma as well.