Today, Americans for Tax Reform sent a letter to the Maryland General Assembly in opposition to Governor Martin O’Malley’s budget.  You can read the letter here. 

Gov. O’Malley’s budget would increase income taxes by capping deductions on single earners making more than $100,000 annually and on couples making more than $150,000.  Estimates show that capping deductions for singles and couples at these respective levels would impact not just the top 1-percent or even 10-percent, but the top 20-percent of wage earners in the state. 

Not satisfied by soaking Maryland’s middle class, Gov. O’Malley has proposed almost every other tax increase in the book, throwing them all into the budget – even the kitchen sink, literally. Gov. O’Malley’s budget includes a “flush tax” increase on Marylanders’ water and sewage usage – better fix those leaky faucets and think twice about needing to use the toilet. 

Determined to put the final nail in the coffin of Maryland businesses and employers, Gov. O’Malley’s budget includes tax increases on the coal and telecommunications industries, and a tax on cigars and smokeless tobacco.  Increasing taxes on major employers in the state and on products sold by small business retailers are not ingredients for economic recovery in Maryland, they’re indicators of the economic and fiscal disaster that looms over the state. 

The proposed budget would increase taxes on cigars and other tobacco products by 70-percent at the wholesale level.  This tax increase would hammer already struggling small businesses and retailers in Maryland, especially those near the border.  Why purchase a product in Maryland when it is cheaper to buy in the state next door?  Higher taxes on tobacco products doesn’t cause people to use them less, it just drives business across state lines – hurting Maryland retailers in the process. 

Don’t just take ATR’s word for it though. Excise taxes do drive business across state lines, the Atlanta Journal Constitution’s PolitiFact points out, “ATR told us that Chicagoans flocked to neighboring Indiana when Cook County, which encompasses the Windy City, raised its cigarette tax by $1 in 2006. After the 2006 changes in Cook County, Chicagoans paid among the highest prices for cigarettes in the country. A team of University of Illinois-Chicago researchers found in a sample survey of discarded cigarette packs that 75 percent of them came from outside Cook County, The Huffington Post reported. The taxes on a pack of cigarettes in Chicago in 2007 was $4.05. The taxes were $1.37 outside city limits.”

Even worse, Gov. O’Malley has been more than coy about the total cost of his budget. The Maryland Reporter calculated that Gov. O’Malley’s budget approximately costs $35.5 billion, over a 2-percent increase from last year – though Gov. O’Malley seems to think that his budget cuts spending.  

Maryland House Minority Leader Tony O’Donnell called the budget, “…an outrageous kick in the stomach to small businesses and families struggling to make ends meet.”

Gov. O’Malley calls his budget a “balanced” approach.  It would appear that he intends to “balance” his budget on the backs of hard working Marylanders and their families. 

To read ATR’s letter in opposition to Gov. O’Malley’s budget, click here. 

Posted by Will Upton on Wednesday, January 25, 2012 3:22 PM EST

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