Hold On To Your Wallets

Yesterday at the Maryland Association of Counties PorkFest in Ocean City we began to see the outlines of what Governor O’Malley sees as the “structrual deficit” and what he wants to do about it.

The “structural deficit” is that Marylanders are keeping too much of the their money.

The cure is taxation.

Gov. Martin O’Malley announced yesterday that he will seek a major infusion of transportation funds next year, an indication that he will propose more new taxes than the minimum needed to eliminate the state’s projected $1.5 billion budget shortfall.

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The governor offered no specifics of how much he would seek to raise or how he would do it, though higher gasoline taxes are a likely possibility. Local leaders gathered here for the Maryland Association of Counties warmly embraced O’Malley’s commitment, saying they suffer from years of under-investment in roads and mass transit, leading to some of the longest commuting times in the nation.

O’Malley’s transition team recommended a gas tax increase, and Senate President Thomas V. Mike Miller pushed for one during this year’s General Assembly session. His plan would have added 12 cents per gallon to the tax and would have made further increases automatic as the price of gasoline rises. That proposal would have raised about $425 million a year, which could be leveraged through bond sales into billions for transportation projects in the coming years.

It is hard to think of a more boneheaded tax proposal than Mike Miller’s though it is outlandish enough to make anything short of 12 cents per gallon indexed to the price of gasoline seem reasonable.

The tax on gas is an incredibly regressive tax hitting hardest those who earn the least and in a small state like Maryland it is more likely than not to achieve little.

I live two miles from a gas station in Virginia which usually undersells Maryland stations by 2-3 cents per gallon. I don’t buy gas there regularly because saving 30 cents or so, max, on a fill up isn’t worth the effort. Once the differential becomes 15 or so cents per gallon the economics change. Lots of Marylanders live near other states or work in other states.

Even the lefty Alliance for Tax Fairness found that raising the gas tax by 1 cent was opposed by 55% of a very tax-friendly sample and the Miller 12 cent proposal was opposed by 79%.

Just because the state department of transportation has a multi-billion dollar wish list is not a compelling case for funding that wish list. And if there is one thing that more roads have been demonstrated to bring it is more congestion.

One would hope that anti-tax conservatives, environmentalists, and advocates for low income families could create an alliance to defeat this extraordinarily bad idea.

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