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The Tentacle


November 17, 2011

Two Feathers in Franchotís Cap

Amanda Haddaway

It’s refreshing to see an elected official in the state of Maryland be a good steward of the taxpayers’ dollars and use common sense. Fiscal responsibility and sound reasoning are indeed precious commodities in our current culture of tax-n-spend and tax-some-more, led by Gov. Martin O’Malley.

 

However, Comptroller Peter Franchot has made the fiscally prudent recommendation by telling the governor that the state of Maryland shouldn’t pursue taxing Internet retailers. In his estimation, the state would likely see only an increase of $5 million and would almost certainly see costly litigation from online behemoths who have craftily sought ways to avoid collecting sales tax in most states.

 

While $5 million is certainly not pocket change, a lengthy legal fight with one or more retailers would easily take a major chunk out of this total figure. It would also be a hard battle for the state to win due to legal precedent set in two earlier Supreme Court cases.

 

A 1967 Supreme Court decision blocked states from forcing a remittance of sales tax unless a merchant has a physical presence in the state. The same principle was reaffirmed in another Supreme Court case in 1992.

 

Congress is currently considering the Main Street Fairness Act and the Marketplace Equity Act of 2011. However, without a law being enacted, it would be unlikely that Maryland could collect anywhere near the currently estimated uncollected $240 million in taxes from online purchases by state residents.

 

Our comptroller is wisely “picking his battles” and understands that this one isn’t worth fighting yet. The governor would be wise to follow Comptroller Franchot’s advice. Governor O’Malley would be better served by learning ways to live within the state’s means, rather than seeking additional funding sources on the backs of taxpayers.

 

In addition to this recent report, the comptroller has been busy with other initiatives, including a push for financial literacy to be taught in our high schools. The initiative is pure genius.

 

According to the comptroller’s website, the course would be a graduation requirement and would teach the principles of personal finance. It would include lessons on the proper use of credit, the risks of excessive debt, the value of sound household budgeting and the importance of saving and investing for the future.

 

It’s rather scary that these topics aren’t already being taught in our public schools. Several years ago, students taking home economics in Frederick County middle schools were taught how to write a check and balance a checkbook. However, this portion of the curriculum may have gone by the wayside in an era of online bill paying.

 

Comptroller Franchot hopes to gather 10,000 signatures on his financial literacy petition before the 2012 General Assembly session. To add your own name to the petition, visit http://www.comp.state.md.us/comptroller/initiatives/literacy/.

 

The comptroller seems to have a firm grasp on the fact that many Marylanders are struggling financially. At the end of last month, he said the state’s problem is that “we have no fiscal discipline.” He is exactly correct.

 

Again, the comptroller has stepped up to the plate for taxpayers and called for a two-year freeze on hikes in taxes and fees, including increases to the state’s gas tax. He also wants to defer O’Malley’s darling, the flush tax.

 

Comptroller Franchot made similar comments in 2010 and it appears that he’s staying on target with his message. Let’s hope someone in Annapolis hears him.

 

Contact Amanda via email at amanda.haddaway@gmail.com. You can also reach her via her blog at www.amandahaddaway.com.

 



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