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The Tentacle


August 16, 2007

The Path of Destruction

Chris Cavey

Daily we march closer and closer to the O'Malley special tax session of the Maryland General Assembly and the financial repercussions the average citizen will endure. Significant tax increases can be avoided or abated if a little common sense is applied to state government.

The media, most of which didn't major in math in college, have hyped the idea of needing income to cover a "structural deficit." Gov. Martin O'Malley and the Democratic leadership are preparing to take advantage of a special session to save face by taxing you.

What you need to know is that "structural deficit" is just a term of bureaucracy. In plain terms it means you budgeted more money, although not yet spent, than you have planned to take in as income.

Basically you want to spend $4,000 on Christmas this year but the Christmas Club savings plan you have will only amount to $3,500 when the Credit Union sends your annual check. You either need to find another money source to make up the difference, or back off a little on the Christmas presents!

That is a real life structural deficit. In the land of government spending, the concept of backing off a little or admitting you are proposing to spend more than you make is not real life, mostly because Governor O'Malley and the majority of our legislators do not act as if they were spending directly from their wallets. They spend from yours and mine.

The key to remember is this type of deficit was caused from money they want to spend, not money they are obligated to spend. Want and desire are two of the steps on the path of destruction.

The state can and will continue to meet obligations and serve its citizens. No one is proposing reduction of law enforcement or teachers; no one is objecting to needed cost of living improvements within state government. All that is needed is a slowing in the projected growth of state government and its future obligations.

An example for the average Joe would be: You would like the family to have a 65-inch HDTV this year. However, you promise a nice 48-inch HDTV in the spring when you can afford it. After all, you only have a 10x10 living room and your current 48-inch TV is only three years old. The kids can wait a couple of months.

Since 2000, the state's operating budget has increase about 70 percent and Marylanders incomes have increased only 28 percent. We need to demand that the budget process come more in line with growth in our citizen's incomes.

The solution is not increased taxation on Maryland's citizens. Those who are hurt the most by proposed taxes will not be the businesses and services, but the single Mom living in your neighborhood. It will cost her more to get the kids haircuts, purchase clothes, buy school supplies, repair the family mini-van and put gas in the tank. Levying a tax on a business or creating tax on services affects the consumer only because taxes are passed through the business direct to the consumer.

Progressive tax on gasoline and fuel is the most dangerous of all taxes. Now we have a fixed-cost tax. Think of it as an addition problem. Arab oil plus tax equals your cost at the pump. Progressive tax is a multiplication problem. Arab oil times the tax equals your cost at the pump. Different story.

When the Arabs force the cost of oil higher, you pay multiplicatively more tax at the pump. This not only costs you directly as you fill up, but indirectly because those you buy goods and services from are paying more.

Yep, the businesses, both big and small, will pass this through to you in their goods and services. The plumber, appliance repair guy, tow truck operator, Sears and Wal-Mart, everyone uses vehicles to operate. You will pay at the pump directly and then again indirectly many times.

The answer is simple; Maryland needs to live within its means. Budget and plan within current expected income forecasts. No one is calling for sacrifice of existing obligations; they are only requesting a common sense look at projections and a solution that is of value to citizens.

The new HDTV might even be more appreciated in the spring.



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