Who thinks they don’t pay enough state taxes?
No one does. That’s why it was hardly a shocker last month when freshmen Republican delegates released the results of a poll that found more than three out of five Maryland voters (63%) said they “pay too much in taxes.” Duh.
Even if you exclude the 80% of Republicans who think their taxes are too high, a slim majority of Democrats and independents agree, as do three out of four men and women, blacks and whites. Only in Baltimore City do less than half the people (45%) think their taxes are too high, according to a Gonzales Research telephone survey of 808 registered voters in January.
About a third of the people thought “they pay about the right amount in taxes,” and only a tiny 4% of the people think they pay “too little.”
Were these the guilty rich people the Warren Buffets of the world who think they should pay more?
A single question on a statewide survey can’t answer that, and the question itself doesn’t distinguish between state, federal and local taxes, so we don’t really know that these folks are opposed to higher Maryland taxes. In most cases, they are, but other polling throughout the years has shown that voters do favor higher taxes for specific purposes, such as education and health care, and on specific products, such as tobacco.
Some Polling Supports Tax Hikes
A December poll for the Maryland Citizens’ Health Initiative (MCHI) found that two-thirds of Maryland voters support increasing the state’s tobacco tax. This group helped push last year’s 3% tax hike on alcohol.
The MCHI said its poll, by Opinion Works — another Annapolis polling firm — shows 65% favor the idea of another $1 a pack tax on cigarettes. About 72% of Maryland voters support taxing cigars and smokeless tobacco at the same rate as cigarettes. The poll ties these tax hikes to increases in health care spending, as did the polls on the alcohol tax.
Some of these poll results also reflect the “tax-the-other-guy” syndrome. According to surveys by the Centers for Disease Control and Prevention, only about 15% of Marylanders smoke. Even fewer people light up a stogie or use chewing tobacco. So 85% or more of voters would not pay higher tobacco taxes themselves.
O’Malley Testing Tax Resistance
Gov. Martin O’Malley has decided to test the limits of Marylanders resistance to higher taxes by proposing more than a billion dollars in tax hikes this session. O’Malley is faced with both a continuing “structural deficit” of $1 billion — the gov prefers to call it a “recessionary deficit” — and a desire to pump up construction spending, fostering more jobs in the hard-hit building trades.
O’Malley wants to increase taxes on people making more than $100,000 per year, double the flush tax for the bay, add 80 cents to the cost of a single blunt cigar, and apply the sales tax to purchases of gold coins and some Internet sales, including music and software. (“Want an app? I’ve got a tax for that,” quipped commentators.)
The biggest tax hike would come on gasoline. Unveiled after months of anticipation, O’Malley surprised even the head of his Blue Ribbon Commission on transportation funding by proposing a 6% sales tax on gasoline that would raise $613 million for highways and transit projects. The cost of gas would go up by 18 cents per gallon (3 cents more than the commission recommended) on top of the current 23.5 cent per gallon levy last raised in 1992.
“The best option … is to get away from the flat, per-gallon tax and instead move to a percentage,” O’Malley said. Taxing by the gallon and not by price “is why we have one of the most congested metropolitan areas in the country.”
Legislative leaders were already struggling to get the votes for a possible 10-cent per gallon gas tax hike. As Senate President Mike Miller said, a gas tax hike “doesn’t poll well.”
The Mid-Atlantic Petroleum Distributors’ Association released the results of their own question from the same Gonzales Research poll that showed Marylanders overwhelmingly oppose a 10-cent per gallon gas tax hike. The poll found 76% oppose the increase, with 62% strongly opposed. A majority of voters from all regions, all parties, both races and genders oppose the tax hike.
Backing Unpopular Options
“None of these options are popular options,” O’Malley conceded. But “inaction is irresponsible.”
Another unpopular option he’s proposing is limiting itemized deductions and tax exemptions for single people making more than $100,000 and couples earning more than $150,000. O’Malley emphasized that eight out of 10 households would not pay more taxes, but his plan would make 450,000 households pay more.
O’Malley said the average family of four making $150,000 a year would pay an added $191 in state and local income taxes. This would raise about $182 million for the state and $111 million in county piggy-back taxes, partly helping to offset a shift of the cost of teacher pensions to county governments. These 450,000 households pay almost two-thirds of all state and local income taxes.
“I don’t like asking for this,” O’Malley said at a news briefing on the budget. “I don’t like doing this. “These are difficult things that we have to ask in difficult times.”
The political advantage of capping exemptions and deductions is that this allows the state and county governments to collect more revenues without actually raising tax rates. The governor is also asking for a doubling of the flush tax from $30 to $60 a year to replenish the Chesapeake Bay Restoration fund for upgrading sewage treatment plants.
Removing nutrients from the bay has proved to be costlier than expected. O’Malley would tie the tax hike to water consumption. But under the usage rates he’s offering, most people wouldn’t save very much and other public water users who take long showers and water their lawns would see the tax triple or quadruple.
Republicans, as Usual, Are Opposed
Republicans were predictably upset at O’Malley’s budget plan, and none are likely to vote for any of the tax increases, including those that might fund road projects in their districts. This includes every GOP legislator from Howard and Anne Arundel counties. Fiscally conservative Democrats are generally skittish about tax hikes as well.
“This is an outrageous budget even by Annapolis standards,” said Senate Minority Leader E.J. Pipkin of Cecil County. “This governor has not seen a tax he does not like.”
“The governor’s budget redefines ‘wealth’ in this state and takes aim at the middle class,” said House Minority Leader Anthony O’Donnell. “Forget millionaires, this budget takes aim at thousandaires, phasing out income tax deductions, such as mortgages and business expenses, for those making even $100,000 per year. The governor is balancing the budget on the backs of the middle class and small businesses.”
Except for the income and gas taxes, most of the tax hikes don’t raise a lot of money, but it’s hard to imagine lawmakers approving all of them in a single session, particularly those that affect so many people.
It may be part of an O’Malley strategy to shoot for the moon, but accept a smaller slice of cheese, much as the Maryland Transportation Authority proposed whopping toll hikes, but then passed much smaller increases after citizens protested.
Pension Shift Has Ulman Steamed
County officials, school boards and teachers unions are all upset about the governor’s proposal to split the cost of teacher’s pensions. Howard County Executive Ken Ulman is particularly steamed at the idea the county governments, and not the school system, should pay some of the cost for pensions based on teacher salaries they have no control over.
“We don’t make these salary decisions,” Ulman told the Senate Budget & Taxation Committee last month. “We don’t negotiate with the teachers.”
Ulman points out that he spends 60% of his budget on education (including libraries and the community college), yet has little say concerning how it’s spent. O’Malley income tax proposals are crafted to help the counties raise more revenues, since the local income tax piggybacks on the state taxes. But Ulman said the numbers put out by the governor’s office showing a $10 million gain for Howard County are “deceptive” since that covers 18 months of income tax revenues, and will be less in following years.
The governor’s staff is also counting savings from eliminating county payments into an income tax reserve fund that the counties don’t think they should be paying in the first place. The state raided the money from the fund to pay for other programs and is now making the county governments replenish it.
Expect to hear more from Ulman on these issues that put him at odds with O’Malley, who’s generally been his political ally.
