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.