“We can’t have special interests sitting shotgun. We’ve got to have middle-class families up in front.” So said President Obama in 2010, previewing what would be his central policy platform in the 2012 presidential campaign: hold the line on taxes for 98 percent of Americans while raising taxes on the wealthiest 2 percent.
This argument is fiscally flimsy but politically potent, as the president’s Election Day victory demonstrated.
But Democrats in Maryland are taking the opposite approach to tax policy, leaving everyday Maryland families and small businesses firmly in the backseat. Gov. O’Malley and lawmakers have lowered taxes and fees for Maryland’s quintessential special interest — wealthy casino owners — while confiscating more income from Maryland’s nonwealthy citizens.
This summer, state lawmakers raised income taxes on residents earning $100,000 or more per year — far below the $200,000 threshold sought by President Obama. In fact, as Obama told CNN in 2008, “If you’re making $100,000 a year or less, then you’re pretty solidly middle class, and you deserve relief right now, as opposed to paying higher taxes.”
Gov. O’Malley has also endorsed a gas tax increase, putting more weight behind the policy wedge between Maryland Democrats and Obama. The president opposed a federal gas tax increase in his first term on the grounds that it would pinch the lower and middle class most.
Lastly, the O’Malley administration has enacted several increases in electrical bills for everyday Marylanders. After blessing a 72 percent increase in his first year in office, O’Malley asked for a second increase this past October and will likely ask for a third in January to help subsidize a new wind farm in the Atlantic Ocean.
Thus, taxes and fees are going up for everyday Marylanders, but they’re going down for casino special interests. They are enjoying special carve-outs that ordinary small businesses and residents only dare imagine.
In August, lawmakers cut income tax rates for casinos by as much as 10 percent as part of a deal to expand gambling to Prince George’s County. This tax cut comes to roughly $48 million for casino owners that was previously reserved for public education.
Early this year, the state will sell the Prince George’s County casino license at a heavily discounted rate, robbing taxpayers of a fair-market rate of return for permitting gambling within their borders. MGM Resorts International, the presumptive winner of the license, is expected to pay $18 million for a license that has a market value of up to $500 million. That $482 million giveaway to casinos equates to 21,000 four-year scholarships to the University of Maryland for the children of Maryland’s middle class. So much for moving out of the backseat.
It’s not too late for Maryland lawmakers to reorient their priorities. Here are two simple ways to protect the economic freedoms of lower and middle-class families while eliminating special favors for casino interests.
First, lawmakers should forgo a gas tax increase and instead return the $1.1 billion they drained from the Transportation Trust Fund. Doing so keeps state government out of lower and middle-class pocket books while still providing the cash infusion needed to upgrade deteriorating roads and bridges.
Second, reform Maryland’s casino license fee model to capture the true market value of a casino license. Dedicate those proceeds — in excess of $482 million — to improving education for everyday Marylanders who have less in their pockets due to years of increases to taxes and fees.
It’s time to reimagine Maryland’s tax policies so that politically connected casino owners take a backseat to everyday citizens and small businesses.
Christopher B. Summers is president of the Maryland Public Policy Institute, a nonpartisan think tank dedicated to limited government and free enterprise. His email is [email protected].
