L ess than two weeks after joining his fellow county executives at a rally to drum up support for Maryland Gov. Martin O’Malley’s budget, Montgomery County Executive Ike Leggett had a sudden epiphany. The lightning bolt came in the form of a state comptroller’s report noting that 80 percent of the revenue raised by the governor’s proposed income tax increase would come out of Montgomery County taxpayers’ pockets.
This should not have been a surprise to Mr. Leggett. Traveling around the state trying to sell his $1.7 billion tax package, the governor had been promising that 83 percent of Marylanders would pay less tax under his proposal. It doesn’t take a valedictorian to figure out where O’Malley planned to find the other 17 percent who would pay more: Leggett’s own constituents.
The real shock was the sight of Leggett suddenly lecturing state lawmakers at a joint hearing of the House Ways and Means and Senate Finance committees in Annapolis, Md., warning them that imposing the highest state income tax rate in the D.C. area would jeopardize “Montgomery County’s role as the economic engine of the state and our ability to remain competitive.” Grover Norquist couldn’t have said it better.
Montgomery County taxpayers will indeed bear the major brunt of O’Malley’s “statewide” tax increase because they tend to have higher incomes and own more service-oriented businesses — both of which are targeted for steep tax increases — than people in other parts of the state. The extra tax bite will worsen Montgomery’s already heavy burden as the state’s top donor county.
Apparently, even Leggett now understands that taking more money from small businesses and county residents making $150,000 or more — in an area where the average price for a home this summer was $778,962 — will have devastating economic repercussions down the line. O’Malley might as well have called his proposal the “Stick It to Montgomery County, Again” plan.
Leggett’s testimony in Annapolis was his belated acknowledgment of a basic law of economics: When taxes go up, economic activity (and the revenue it generates) goes down. Yet Leggett just couldn’t bring himself to take the next logical step and call for major cuts in state spending to balance the budget instead of O’Malley’s enormous tax increase. That’s something Montgomery County Democrats just don’t do — tell Baltimore politicos like O’Malley to go pick somebody else’s pockets.
