Wednesday, May 15, 2013

Legislative Updates By Delegate Mike McDermott

How Not to Grow an Economy, Part 2
  • By  Delegate Mike McDermott

  • May. 14th, 2013

    When Pennies Become Dollars:
    How To Not Grow an Economy, Part 2
    When it comes to raising taxes, no one can minimize like a Maryland liberal. During the previous two regular sessions of the General Assembly, one can find unimpeachable evidence of how they sell a tax by the penny while beguiled Marylanders will pay a pound at the register. Consider these examples of their “bait and switch” mastery:
    The “Rain Tax” (HB-987) was tucked away in 2012 with an action date set for 10-counties on July 1st of this year. The lower shore local governments are not compelled to collect a Rain Tax from their people, though some jurisdictions are moving ahead with plans to do so. This tax is designed to pay for infrastructure improvements to address storm water management issues (many believe that this is what they pay Property Taxes for in the first place). This tax is being “marketed” as being only $20 to $50 per homeowner annually as they are assigned a flat rate no matter the size or scope of their property. The same rates do not apply for business property.

    Commercial properties, hospitals, churches, schools, etc. will be required to pay a tax rate based upon the square footage of impervious surface which they have on their respective properties. Sidewalks, driveways, and rooftops all count in figuring how much the owner, corporation, or congregation must pay. Suffice it to say, there will be no $20 bills for these properties. In fact, some of these commercial properties with their significant parking lots could easily find themselves paying in the $15,000 range and up. Just imagine the bill for a mall property!  What do you suppose a business owner or corporation with a tight bottom line  is going to do about paying this new tax? They will have little choice but to pass it on to their customers through higher costs at the register…yet they tell us it will “only cost a homeowner $20 per year!” That 20 bucks is the least of our worries.

    How about those “green” wind turbines off our coast? (SB-275)  Well, those same folks claim the new Electricity Tax will cost you less than “$2.00 per month”. What a deal! What they do not tell you is the Electricity Tax for business and commercial properties is going to be significant and will be in proportion to the amount of electricity utilized. It is so significant; the poultry growers were able to lobby hard to be exempted from most of this new burden, but not so for every other business entity in the state.

    Supermarkets are big consumers of electricity as are retail stores. Who is going to pay for the added expense that these business entities will be forced to absorb to pay for this boondoggle? It will be those same folks who were told, “You will pay less than $2.00 per month on your bill”. The folks that propose this nonsense appear to have zero conception of how a business actually operates, or perhaps they believe our business community is flush with cash and will simply take it out of their marginal profits. Well how about local government? Schools, government buildings, street lights, all will be subjected to these higher rates resulting in a direct pass through to the taxpayer. How’s that “$2.00” sounding now?
    These are the same people who just handed you a perpetual gasoline tax (HB-1515) which will increase like clockwork every July 1st and be forever linked to the consumer price index (CPI). So, when the cost of everything else goes up in your hard working life, the price of your misery at the pump will rise in proportion to the pain you experience everywhere else in your budget.  Don’t worry, if the CPI ever drops, the same legislators rejected any amendments to make the tax decrease in like manner. They also rejected the idea of some type of cap on this tax.
    Keeping this in perspective and doing the math, if they had established this same tax in 1992 linked to the CPI, Marylanders would be paying over $10.00 per gallon to fill their tanks. This adjustment would have been bad enough, but they have also added a new Sales Tax to the cost of fuel which will be phased in over the next four years. The net result will be an 80% increase in the Gasoline Taxes (currently at 24.5 cents per gallon).  Of course, this was sold to the public as “mere pennies” at the pump.
    So, what about the fact that 90% of the goods utilized on the Eastern Shore are trucked in overland? The cost of shipping goods always comes with the fuel cost factored into the overall price.

    Again I ask you, is there anyone who thinks that we will not be paying for increased cost of folks doing business with every purchase we make at a register? All of those “mere pennies” quickly add up to real dollars.
    As the government draws more money out of the economy through these new taxes and fees, taxpayers/consumers find themselves with fewer discretionary dollars. This always results in fewer dollars being put back into our local economy and every point of commerce suffers. When business slows, expansion is put on hold. When business suffers loss, people lose jobs.
    I am not sure where the disconnect lies with legislators who see nothing wrong with this tax and spend approach at governing, but I am quite sure the public is fully able to connect the dots. I was recently at a meeting of local business owners and entrepreneurs when a senator told them that what they could “conceive…the government would help them achieve”.  Sadly this was repeated so there was little doubt where he was coming from in his thoughts regarding the purpose and scope of government.
    The American dream is the recognition that if you can conceive an idea or a concept, your freedom and liberty will allow you to achieve it through personal dedication and the sweat of your own brow.  Liberty is the mortar that binds Conceiving and Achieving together. When our dreams become dependent upon the government to fulfill, we extinguish liberties flame and, along with it, the American Dream.


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