Maryland Governor Proposes New Tax On Tanning Services

[Ezliving_Jim]

O'Malley to propose sales tax increase to 6%

Sales tax would also expand to cover more services; property tax would decrease

By Andrew A. Green Sun reporter

10:54 AM EDT, September 20, 2007

Gov. Martin O'Malley will propose increasing the sales tax from 5 percent to 6 percent and expanding it to cover services that include health clubs, tanning parlors, massage services and real estate property management.

He announced the proposals at a Howard County home this morning, along with a plan to cut the state's portion of the property tax by 3 cents, which would erase an increase approved four years ago.

The steps are part of a package to eliminate the state's projected $1.7 billion budget shortfall and to add hundreds of millions in new spending for roads, mass transit, health care and the environment.

Source

[Ezliving_Jim]

We should also expect another anti-tanning salon regulations bill similar to proposals in past years to be reintroduced.

It is time to organize a coalition of Maryland indoor tanning salon owners.

[Ezliving_Jim]

Increased Business Taxes = Maryland Job Losses

The Maryland Chamber, along with a coalition of business partners including the West County Chamber (the only Anne Arundel County Chamber participating), yesterday released an Ernst & Young study analyzing the economic and fiscal impacts of the tax policy options being discussed by state policy makers to address Maryland's $1.5 billion structural budget deficit.

Highlights of the study include:

• Maryland businesses will pay a significant share of the increased taxes under most of the options evaluated. Business would pay 40% of a sales tax rate increase, 79% of a sales tax expansion to professional services, and as high as 33% of adding a 6 percent top individual tax rate bracket (because many small businesses, being LLCs or S corporations, pay their business taxes on their personal income taxes).
• Changes to corporate taxation have the highest cost of all policy options in number of jobs lost per $1 million of tax revenue raised.
• The incidence of jobs losses across the sectors of the economy varies. A comparison of the corporate income tax rate change and the sales tax rate change shows that the corporate income tax increase results in a larger share of jobs losses in higher paying occupations.

While not encouraging new taxes, the Maryland Chamber recognizes that the State's structural deficit will be resolved by a combination of additional permanent spending cuts, slots, and taxes. They have adopted the following positions:

• Encourage the Governor and General Assembly to make at least $400 million in additional spending reductions.
• Support carefully regulated slot machines in limited locations to fund public education.
• After making additional cuts and authorizing slots, the Maryland Chamber recognizes that taxes will be part of the solution. They are encouraging the Governor and General Assembly to consider the potential negative impacts of the various tax policy options. The taxes selected should allow Maryland to remain competitive with surrounding states and minimize the potential negative effects, including job loss.
• The Maryland Chamber opposes any extension of the sales tax to business and professional services and the authorization of combined reporting for corporate income taxes. The E&Y study clearly demonstrates the negative impact on Maryland's ability to retain jobs if these proposals were adopted.

The West County Chamber will be evaluating the study and the legislative proposals to determine our stand, and we will be encouraging our members to contact their legislators PRIOR TO the Special Session.

In order to inform our membership about the content of the tax study, and discuss the positions of the Maryland Chamber and whether it is appropriate for the West County Chamber to adopt similar positions, we will be holding an expanded meeting of the Chamber's Legislative Committee on Tuesday, October 2nd at 8:00 a.m., tentatively at Kaufmann's. Karen Syrylo, the Maryland Chamber's Tax Consultant, expects to be present to explain the study, and we will discuss the West County Chamber's position and next steps. Please mark the date on your calendar, and we will provide confirmation of the details as soon as they become available.

[Alan @ TanToday]

Jim

I agree with you about alot but is charging sales tax on tanning going to lose you customers? Come on, how many will ou lose? ANSWER: Not one!

I love that they want to finally lower property taxes for once!

[phattmatt]

Hurt the minority of the Maryland population that vote, which is the business owner to make his re-election a shoe-in and to help out the ones that don't vote, which is the general population.

[Ezliving_Jim]

You are wrong, Alan. Go back to Economics 101.

Money taken in taxes can't be spent on goods and services.

Increasing the cost of non-essential services will negatively impact sales. Tanning salons will lose customers.

If you think any household over the poverty level in MD is going to pay less in taxes under O'Malley's plan, you are high.

[phattmatt]

Gotta get high, Gotta get High, Gotta get high...dah....dee...dah,dah

[Alan @ TanToday]

Jim

Don't tell me about Econ 101. I have a friggin ECON degree on my wall.

Sales tax will not effect how many people tan in your salon. When you start getting dirt poor people in your salon then come talk to me because they are the ones most affected by a sales tax increase.

As for the decreasing prop taxes, I did look at it and I will save a few hundred a year per house. Not a lot but when you have alot of properties it adds up. We already have once of the lowest sales tax in the USA.

I am not agreeing that higher taxes should happen Jim, as a Republican I am anti-tax. My point is that it WONT affect your sales.

[Ezliving_Jim]

Alan, I don't care if you understudied with Alan Greenspan. You forgot the lessons about the negative effects of higher taxes on small businesses.

Increasing taxes by $2 billion in Maryland is going to hurt small businesses, especially if the business is providing non-essential personal services that will also cost 6% more overnight.

You might get a small break on property taxes but that won't cover the increased taxes that you will pay everywhere else. You can't see throught O'Malley's smoke and mirrors?

O'Malley also wants to bump Maryland's gasoline tax by another 10 cents a gallon. Bend over.

Federal Minimum Wage goes up again in July 2008 to $6.55. It goes up to $7.25 in July 2009.

I believe my clients earn close to the state household median. They will get hit the hardest.

[Ezliving_Jim]

Editorial
Marylanders are already overtaxed, Gov. O’Malley

The Washington DC Examiner Newspaper, The Examiner
2007-09-26 07:00:00.0


WASHINGTON - T o deal with Maryland’s $1.5 billion deficit, Gov. Martin O’Malley wants to increase taxes on just about everything, including personal and corporate income, sales, services, tobacco, gasoline, vehicle titles, you name it.

The $2 billion in new taxes he’s proposed doesn’t cover the $137 million needed to satisfy requirements of the 2002 Thornton education funding law, as the governor promised to do during the 2006 campaign.

The basic flaw in O’Malley’s tax increase proposal is that it assumes Marylanders don’t pay high enough taxes to support our politicians at the level to which they would like to become accustomed. Politicians long ago became accustomed to spending too much. That’s why it isn’t even remotely credible to suggest that a $200 million cut in a $2 billion annual budget is somehow draconian.

But spending cuts are an issue for another day. For now, let’s focus on the impact of O’Malley’s tax hike on Maryland’s economy. The governor needs to look at the map. Steve Entin, president of the Institute for Research on the Economics of Taxation, says studies show people and businesses can move elsewhere fairly easily when the tax and regulatory burden gets too heavy where they are.

“You have to worry about chasing people out of your state,” Entin says. That’s what happened, for example, when Massachusetts tried to tax its way out of a similar overspending problem several years ago. Many companies just picked up and moved to New Hampshire, taking their jobs and their tax payments with them. All those new homes being built just across the line in Pennsylvania and the Marylanders buying them suggests it can easily happen here, too.

Maryland already is less business-friendly than its next-door neighbors. The Tax Foundation ranks Maryland 29th in “business climate” — way behind Delaware (ninth), Virginia (13th) and even trailing Pennsylvania (22nd). Marylanders also have the 16th-highest tax burden in the nation. “Tax Freedom Day” — the date on which taxpayers finally get to keep their own earnings — doesn’t come until May 1 in the Old Line State. It will be even later if O’Malley has his way.

Slapping new taxes on accounting and legal firms, car repair and beauty shops, real estate agents and appraisers, or any of the other service and professional businesses that have helped make Maryland the wealthiest state in the nation is a particularly bad idea, according to the National Federation of Independent Business, which warns state legislators that small firms here will be the hardest hit.

So, when are the politicians in Annapolis going to start taking some real hits for a change?

[Ezliving_Jim]

Please focus your calls on your representatives (Senators and Delegates) in the districts where you live and where your business is located. http://mdelect.net/

Also, contact the Delegates on the Ways and Means Committee. http://www.msa.md.gov/msa/mdmanual/06hse/html/com/07ways.html

Contact Senators on the Budget and Taxation Committee. http://www.msa.md.gov/msa/mdmanual/05sen/html/com/01bud.html

Contact Gov. O'Malley. http://www.msa.md.gov/msa/mdmanual/08conoff/html/01gov.html


Please encourage any Maryland salon owners you know to get involved. Ask them to contact me to receive updates.

[Alan @ TanToday]

Jim

Isn't it funny that Ehrlich could never get slots in Maryland and now all a sudden a Democrat is elected and I bet MOM gets what Republican Ehrlich had tried to get for years? I hate the politics in this state!

[Ezliving_Jim]

And the day after De Francis sells the tracks....

[Ezliving_Jim]

Tax 'Fairness' in Action
October 1, 2007; Page A22

Every state has its problems, but we're especially glad this month that we don't live in Maryland, where Governor Martin O'Malley has been undertaking something close to a tax-increase-a-day tour.

In Ellicott City he proposed raising the sales tax to a rate of 6% from a nickel. The next day in suburban Baltimore he unveiled his plan to raise the top income tax rate to 6.5% from 4.75%. Last Wednesday in Landover he called for a doubling of the cigarette tax to $2 a pack. He has also endorsed a one percentage point hike in the state corporate income tax to 8%, new commercial real estate taxes, and a 12 cent hike in the gasoline tax to 35.5 cents a gallon. The Tax Foundation says Maryland already has the 23rd highest tax burden among the 50 states, but the Governor seems to be aiming for the top 10.

In all, Mr. O'Malley hopes to wrench $2 billion a year from Maryland workers -- in the name of filling a $1.5 billion gap in the state's $30 billion budget. The extra $500 million will finance new spending. "This is the biggest tax increase in Maryland history, by far," says Christopher Summers, president of the Maryland Public Policy Institute. But like a dentist with a drill in his hand, Mr. O'Malley says this won't hurt a bit. He claims his "reforms" will reduce the tax burden on 95% of state taxpayers, thanks to a lower tax rate on incomes below $15,000 and some tax credits.

But of course everyone will pay the higher sales tax, unless they decide to shop in neighboring Delaware, which has no sales levy.

Mr. O'Malley's income tax plan is consistent with the Democratic Party's nationwide revival of its New Deal theme of the tax code as a tool for income redistribution. While nations over the globe move to flatter, simpler, pro-growth tax systems, the Governor is selling his proposal as a pain-free whack at the rich.

Trouble is, there aren't enough truly rich to finance his spending goals, so his real target is the not-so-upper middle class. His two new tax brackets of 6% and 6.5% will kick in at incomes of $200,000 and $500,000, respectively, for couples. We doubt many families in suburbs like Bethesda or Towson think an income of $200,000 makes them "rich."

The Governor also fails to mention that about two-thirds of the people he wants to hammer are small business owners -- the major employers in the state. He might acquaint himself with a new study by Barry Poulson of the University of Colorado which finds that states with either no income tax, or low flat-rate structures, have significantly higher income growth rates than states with steeply progressive tax rates.

It's a testament to Maryland's spendthrift ways that Mr. O'Malley is doing this in the sixth year of a national economic expansion.

Most states have budget surpluses, and two years ago under Republican Governor Robert Ehrlich even Annapolis was $1 billion in the black. But state spending has since exploded by nearly 18%, according to figures from the Maryland Taxpayers Association.

Maryland spends $11,000 per student in the public schools, and $13,000 in the woeful Baltimore school district. In five years the legislature has fattened school budgets by 59%, yet Mr. O'Malley and the education lobby are claiming poverty if taxes aren't raised.

Mr. O'Malley's fellow Democrats dominate the Legislature, so there isn't much doubt most of this will pass. The losers will be Maryland citizens, unless they move to another state, which we'd guess some of them will.

Source

[Ezliving_Jim]

O’Malley call to special session gets mixed review



Wednesday, Oct. 17, 2007

By Alan Brody
Staff Writer

O’Malley’s budget proposal
* Revamp income tax brackets and increase tax on high-income filers. Raise $163 million a year.
* Increase the sales tax from 5 cents on the dollar to 6 cents. Raise $730 million a year.
* Establish two permanent sales tax holidays. Cost of $13 million.
* Tax four services not taxed now: tanning salons, health clubs, massage services and real estate management services. Raise $74 million a year.
* Cut the state property tax from 11.2 cents per $100 of assessed value to 8.2 cents. Cost of $54 million a year.
* Raise the corporate income tax from 7 percent to 8 percent. Raise $110 million a year, to be split between higher education and transportation.
* Eliminate ‘‘loophole” that lets corporations shield profits from state tax by moving money out of state, or to unprofitable subsidiaries. Raise $20 million a year.
* Eliminate ‘‘loophole” that lets corporations sell property by avoiding state and local transfer taxes. Raise $16 million a year.
* Increase the vehicle titling tax from 5 percent to 6 percent. Raise $166 million a year.
* Peg the 23.5-cent gasoline tax to the cost of construction, projected at about 0.7 percent a year unless the index falls. Raise $63 million a year for roads, bridges and transit.
* Increase the earned income tax credit, returning $33 million a year to low-income families.
* Legalize slot machine gambling: $27 million in licensing fees next year, $250 million the following year with a half-year of operation and $550 million the year after that with a full year of operation, with $125 million for school construction and $425 million for Thornton.
* Double the cigarette tax to $2 per pack: Raise $170 million a year for health care expansion and deficit reduction.
* Dedicate the rental car tax to the Transportation Trust Fund: $40 million a year.
* Double the senior income tax exemption to $2,000 for people with incomes of less than $30,000 a year. Cost of $10 million a year. * Give a $50 sales tax refund to households that earn up to $30,000 a year. Cost of $20 million a year.

ANNAPOLIS — Gov. Martin O’Malley on Monday formally called a potentially risky special session of the General Assembly to take up his proposal to solve Maryland’s projected $1.7 billion budget deficit.

State lawmakers will reconvene in Annapolis on Oct. 29 to begin deliberating O’Malley’s multipronged plan that includes a slew of tax hikes and legalized gambling.

‘‘The time for delay has passed and ... I am optimistic about what the leaders of our state can accomplish when they know that so much is at stake,” the governor said at Monday afternoon’s State House news conference.

O’Malley (D) has warned that the budget gap for fiscal 2009, which begins July 1, will swell to more than $2 billion if the General Assembly waits to address the deficit until its regular session starts in January. Acting in a special session will allow the state to start collecting new revenues on Jan. 1, six months earlier than if action were deferred until the 90-day session.

But in ordering the special session before securing enough legislative commitments to pass his plan, O’Malley is risking defeat in his most closely watched test since taking office in January.

Former Republican Gov. Robert L. Ehrlich Jr. twice called special sessions during his four-year tenure, but vetoed the products that emerged, only to see the Democratic-controlled legislature override him both times.

Democratic leaders in Annapolis want O’Malley to succeed, but some are uncomfortable with parts of his plan and Republicans have pledged to resist tax increase.s Lawmakers from both parties have expressed concern that the complicated plan wouldn’t receive a full public vetting during a brief special session.

O’Malley said he hopes the legislature can complete its work by Thanksgiving, but said there’s no firm deadline. ‘‘We do not want this to be a slapdash process.”

Senate President Thomas V. Mike Miller Jr. has a more ambitious timeline. ‘‘If we can’t get it done in two weeks, it’s ripe for failure.”
A special session cannot exceed 30 days, according to the state Constitution.

Miller told reporters that he advised O’Malley on Sunday night to wait on calling a special session until he secured the votes necessary to pass his plan in each chamber. But Miller (D-Calvert, Prince George’s) also said tackling the deficit now is ‘‘the only responsible thing to do.”

‘‘This is a crisis situation,” he added. ‘‘Everyone has got to pull an oar ... to make this plan go forward.”

O’Malley has spent much of the past month outlining his budget solution to constituents and courting lawmakers, but legislative leaders say slots remain the biggest stumbling block, especially without support from Republicans, who have previously backed legalized gambling. The 14-member Senate GOP caucus has said it would not support slots in a special session, which they view as an effort to impose higher taxes on Marylanders.

‘‘The Republicans need to stand for something,” Miller said. ‘‘They can’t just walk off the battlefield.”

The GOP, he said, should grant O’Malley the same courtesy Miller gave to Ehrlich in his first three years as governor when he championed slots. The governor is modeling his slots plan on a bill passed by the House in 2005 that would have placed 9,500 machines at four locations in Allegany, Anne Arundel, Frederick and Harford counties.

Republicans stand for slowing the rate of spending, rather than taking more from taxpayers, Senate Minority Leader David R. Brinkley responded. And since slots revenue won’t be realized for several years under O’Malley’s plan, there’s no need for a rushed special session.

‘‘He’s gone through the budget surplus we had, and now they’re looking for a quick fix just to get more revenue into the checkbook,” said Brinkley (R-Frederick, Carroll)
House Minority Leader Anthony J. O’Donnell (R-Calvert, St. Mary’s) disputed Miller’s claim that Republicans aren’t participating in the process.

‘‘We have not walked off the battlefield, but what we won’t acquiesce is the raiding of Marylanders’ pocketbooks in the absence of leadership from the Democrats,” he said.

O’Malley maintained that the state must address its long-term fiscal woes now or risk leaving future generations in more dire straits.

‘‘If we are to go back to that ‘simply live for today’ sort of outlook, the alternatives are pretty damaging to the quality of life that all of us cherish as Marylanders,” O’Malley said. ‘‘And I don’t think that that’s the future that any of us would prefer.”

To help close the deficit and pay for $400 million in transportation projects, O’Malley wants to revamp the state’s income tax brackets so the wealthy pay more and middle-class households get a break; reduce the state property tax rate by three cents over three years; constrain education spending; and boost sales, gasoline, tobacco, corporate and vehicle titling taxes, among other measures.

Many House members, including Speaker Michael E. Busch (D-Anne Arundel), who was out of town Monday and could not be reached for comment, preferred to wait until the regular session begins in January to tackle the deficit. The O’Malley administration claims that waiting would worsen the deficit by up to $600 million.
Calling a special session without a consensus is a gamble for O’Malley, said House Majority Leader Kumar P. Barve, adding that the governor is well short of the 71 votes he needs to pass a slots plan in the House.

‘‘He has a tough row to hoe,” said Barve (D-Montgomery), noting that the governor may also find resistance on other parts of his proposal. ‘‘... More likely he’ll come up with a proposal where everyone who feels their ox is getting gored is going to push back,” Barve said.

That discontent spans party lines, O’Donnell said. ‘‘You may find that Democrats don’t like this any more than Republicans do. It’s a bad plan.”

Some of those lawmakers are already readying their own tax proposals. Del. Luiz R.S. Simmons (D-Montgomery) wants to repeal a 10 percent state income tax cut passed in 1997, which reduced the tax rate from 5 percent to 4.75 percent and doubled the personal exemption to $2,400. Budget analysts have said it would generate $588 million and cost about $250 per return.

Part of O’Malley’s plan would revamp the income tax code to make the wealthy pay significantly more than middle-class households. It would raise $161 million

Simmons, who has been one of O’Malley’s sharpest Democratic critics, opposes a special session and challenges the administration’s claim that most people will benefit from the tax plan, due in part to a 3 percent reduction in the state property tax rate.

‘‘I don’t think it’s the modest matter the O’Malley people have been explaining it to be,” he said. Miller also predicted that Marylanders would be skeptical about the assertion that four out of five citizens would pay less.

Attempting to raise revenue in a special session without looking concurrently at the governor’s fiscal 2009 budget is ill-advised, Simmons said. ‘‘What the governor is doing is standing the process on its head.”

O’Malley reaffirmed a willingness to putting slots on the ballot next year for voters to decide if the legislature is unable to break its years-long stalemate on the issue. Barve said that idea may gain traction among lawmakers, but Miller said only that he would reevaluate his opposition to a referendum in the event of an impasse. ‘‘I don’t believe in government by plebiscite,” he said.

The governor said his plan is not etched in stone and can be altered to assuage wary lawmakers. ‘‘This is a forward-looking plan,” he said. ‘‘It is broad enough and it is flexible enough for the men and women of the General Assembly to arrive back at consensus.”

Staff Writers Sean R. Sedam and Douglas Tallman contributed to this report. E-mail Alan Brody at abrody@somdnews.com.

[Ezliving_Jim]

On October 15, 2007, Governor O'Malley, by Executive Order issued a proclamation convening the General Assembly starting on October 29, 2007. The session is being convened for the purpose of passing legislation to address the structural deficit. The "Executive Order" can be found at www.gov.state.md.us.

The Special Session is generating much debate and discussion. Topics include the imposition of new taxes, various tax increases and new revenue sources such as slots.

Speaker Busch said that we will not see the entire budget, only the legislation to increase revenues.

[Ezliving_Jim]

"No Tax Hike" Rally in Annapolis on Monday, October 29

http://www.mdgop.org/images/MD/NoTaxHikeRallyFlyer.pdf


When: Monday, October 29th

4:00-6:00 PM Rally (Get there early!)
6:00-8:00 PM Visit your legislators (Photo ID required)
8:00 PM Special Session begins at the State House (Photo ID required)

Where: Lawyer’s Mall, Annapolis (in front of the State House)

[Ezliving_Jim]

The Bills to tax tanning in Maryland are introduced.

Senate SB-2 http://mlis.state.md.us/2007s1/billfile/sb0002.htm

House of Delegates HB-2 http://mlis.state.md.us/2007s1/billfile/hb0002.htm

[coldgyn]

There is never a tax savings when you introduce a new tax. If property taxes are going down then there are new taxes or "fees" that will more than make up for it. That is a guarentee. A state will never do anything that lowers the tax burden unless forced to do it.

[Ezliving_Jim]

The Bills to tax Maryland taxpayers $2 Billion more are introduced.

This includes a 20% increase in the sales tax, a new sales tax on indoor tanning, higher gasoline taxes and much much more.

Senate SB-2 http://mlis.state.md.us/2007s1/billfile/sb0002.htm

If you are against Governor O'Malley's $2 Billion Tax Increase, contact your district Senator and all the Senators on the BUDGET & TAXATION COMMITTEE http://www.msa.md.gov/msa/mdmanual/05sen/html/com/01bud.html

House of Delegates HB-2 http://mlis.state.md.us/2007s1/billfile/hb0002.htm

Contact your district Delegate and all the Delegates on the WAYS & MEANS COMMITTEE http://www.msa.md.gov/msa/mdmanual/06hse/html/com/07ways.html

Do It Now!
This legislation will probably pass or fail before Thanksgiving.