- The Washington Times - Friday, September 21, 2007

ANALYSIS/OPINION:

In unveiling his budget and tax increase proposal on Wednesday, Maryland Gov. Martin O’Malley drove home once again his determination to play the class-warfare card at every opportunity. At one in a series of P.R. events titled “kitchen table talk,” Mr. O’Malley made clear that his version of one-party liberalism means redistributing income through the tax code, beginning at a special session of the General Assembly which the governor is expected to call early next month.

Under the governor’s proposal, Marylanders would see their property taxes cut, and 95 percent of taxpayers would get modest reductions in their income taxes amounting to less than $2 a week for single filers and just over $3 a week for married taxpayers. (Other lawmakers calculated the percentage of Marylanders whose income taxes would be cut at 83 percent.) But if you are a single person in Maryland making more than $150,000 or a married couple making more than $200,000 annually (in other words, successful people who disproportionately invest and create private-sector jobs), you will be hit with tax increases of between 1.25 percent and 1.75 percent.

Yet class warfare isn’t terribly attractive to residents of liberal, affluent Montgomery County, an integral part of Mr. O’Malley’s political base. “We must be very cautious that we’re not asking people to go live in other jurisdictions, where taxes are not as high,” said state Sen. Rona Kramer, a Democrat who chairs the county’s Senate delegation. “Northern Virginia is an appealing place, and it’s right across the river.” Similarly, Montgomery County Executive Ike Leggett objected to the O’Malley plan because it would hit county residents in the highest tax bracket with a combined state/local income-tax rate of 9.7 percent, which is “not acceptable.”As The Washington Post observed, this combined rate “would also exceed the current top marginal rates in the region. In Washington, the top rate is 8.5 percent; in Virginia 5.75 percent; and in Delaware, 5.95 percent.”

Other aspects of the O’Malley plan include reductions in state property taxes; legalizing slot machines; a 20 percent increase in the state sales tax; an increase in the 23.5 cents per gallon state gas tax; and a doubling of the state cigarette tax. The governor also wants to start adjusting the gas tax for inflation, which is expected to increase pump prices by up to 0.8 cents a gallon annually. And Mr. O’Malley wants to increase the vehicle titling tax from 5 percent to 6 percent of the purchase price of a vehicle. Mr. O’Malley also wants a more than 14 percent increase in state corporate income-tax rates. As another part of what cynics might refer to the governor’s “uproot Maryland businesses to Virginia and Delaware” initiative, he has also raised the possibility of something called “combined reporting” — a way of using state law to prevent businesses from “hiding” profits in other states with lower taxes.

In all, Mr. O’Malley hopes to raise approximately $2 billion to close a $1.5 billion budget shortfall and increase spending for transportation. Notably absent, so far as we can tell, are any efforts to restrain the growth of spending for items like the Thornton Plan for education, which pours money into dysfunctional public school systems like the one in Baltimore City. It’s also disappointing (but not surprising, considering how criminal-friendly the state has become) that the special session will not take serious public-safety issues such as good-behavior credits for violent sex offenders in Maryland prisons (most recently illustrated by the case of Richard Lewis Marks, a recently released sex offender who is accused of attacking a Baltimore County boy in his bedroom). This issue is being given short shrift by the governor, and that’s an outrage.

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