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The Tentacle


November 10, 2010

“Truth will out…”

Kevin E. Dayhoff

Now that the 2010 Maryland gubernatorial election is mercifully over, many have already begun setting their sights on the upcoming session of the Maryland General Assembly.

 

In the aftermath of an election that may be best described as an exercise in “mutually assured destruction,” all signs point in the direction that the upcoming legislative session will be a manifestation of the quote from Herman Kahn's 1960 book “On Thermonuclear War,” which states “the survivors (will) envy the dead.”

 

The 2010 gubernatorial contest was scorched-earth politics at its worse. As pundits scramble to describe the nightmare that was the contest for the Maryland statehouse, one may think of it in terms of “a lie can travel halfway around the world before the truth can get its boots on,” once said by a mid-19th-century British pastor, Charles Haddon Spurgeon in 1855.

 

No matter how you cut it, or who you wished to win the election, you simply must admire the campaign by Maryland Gov. Martin O’Malley for the chutzpah of using the “tax” increases of former Gov. Robert L. Ehrlich, Jr., as the center of his case to retain his office on the second floor of the Maryland statehouse.

 

This, in the face of the fact that one of the largest tax increases in the history of Maryland was enacted during the O’Malley Administration in the 2007 special taxing session which raised taxes by about $1.4 billion.

 

It was billed as the tax increase to end all tax increases and yet the next session will be greeted by a $1.7 billion state budget deficit in January.

 

The next prescient quote says: “If you stop telling lies about me, I'll start telling truth about you,” which was originally uttered by Chauncey Depew, (April 23, 1834 – April 5, 1928,), president of the New York Central Railroad System, who also served as a Republican senator from New York from 1899 to 1911.

 

It is now time to tell Marylanders the truth as to how Maryland’s looming $1.7 billion budget deficit will be addressed.

 

You may be sure that the answer will not be spending cuts or increased efficiencies. The choice of the voters of Maryland on November 2 was quite clear: “please raise our taxes.”

 

It is against this backdrop that on October 26 the “Tax Foundation” released “Background Paper No. 60,” the eighth edition of the “State Business Tax Climate Index,” the 2011 report, by Kail M. Padgitt.

 

I’m sure most readers have never heard about it. Most of the major media in Maryland simply forgot to report on it. Imagine that. Crickets chirping…

 

Fortunately both the Baltimore Business Journal (BBJ) and the Maryland Public Policy Institute did not overlook the study.

 

The most succinct introduction of the 2010 tax climate index was reported by the BBJ: “The report looked at all states' major business tax, whether a corporate income tax or a gross receipts tax; the individual income tax; the general and selective sales taxes; the unemployment insurance tax; and asset-based taxes including property taxes.”

 

The BBJ noted that according to the Tax Foundation’s findings, “Maryland ranked No. 44 in the U.S. on a new study ranking tax climates for fiscal year 2011.

 

“The Tax Foundation's ranking of Maryland's tax fundamentals is a slight improvement from its 2010 ranking of No. 45. The state's ranking fell in the last five years. In 2006, Maryland ranked No. 25…” before Governor O’Malley took office…

 

“Maryland ranked best (No. 11) for sales tax. The state ranked worst (No. 49) for individual income rank. The State Business Tax Climate Index indicates that South Dakota has the best tax policies, followed by Alaska and Wyoming. States found to have the least hospitable tax policies were New Jersey, California, and New York.”

 

So, as many imagine, the Maryland General Assembly has now set its sights on besting New Jersey, California, and New York. One must have goals.

 

And it is not just the Tax Foundation that casts a dismal cloud on Maryland’s business climate. Writing on July 14, Nick Sohr noted on his “Eye on Annapolis” website for The Daily Record, “Maryland’s business ranking holds steady, CNBC says,” – “Maryland held on to its ranking in the CNBC survey of the top states for doing business in 2010, coming in near the middle of the pack once again. The state ranked 27th on the list this year and last.”

 

The Tax Foundation wisely observed that “while most of the tax debate this year has focused around state budget problems and the expiration or extension of the 2001-03 Bush tax cuts, it is important to remember that states' stiffest competition often comes from other states…”

 

Mr. Sohr notes that our competition from our neighbor states has those of us trying to do business in Maryland at a distinct disadvantage:

 

“Virginia, winner of the Northrop Grumman sweepstakes and Maryland’s most frequent foil in business climate discussions, finished second behind Texas. Virginia and the Lone Star State have flip-flopped atop the CNBC rankings in the past four years.

 

“Delaware ranked 42 on the list, but was home to the most friendly regulatory climate. Pennsylvania leap-frogged Maryland, climbing from 33 to the 20th spot.”

 

Keep the aforementioned analyses in mind as you keep a wary – and likely weary – eye on the byzantine machinations of the upcoming session of Maryland General Assembly.

 

Better yet, study the reports and then contact your Maryland delegate or senator and tell them that it is critical that Maryland address the burdensome regulations, obstinate bureaucracies, and staggering tax burden on businesses in our state.

 

kevindayhoff@gmail.com

 



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