Naïveté Is So Cute

Free State Politics’s Andrew Kujan on the O’Malley tax extravaganza:

Either way, when looking at the list of included services, “property management” stands out like a sore thumb among the other services listed. Tanning salons, professional security, 900 numbers, cable TV, to name a few, and property management.No one needs a tan, cable TV, or the psychic friends, but they do need somewhere to live. Nearly 32 percent of Marylanders are renters (pdf), and in Balitmore City, close to half the population are cutting rent checks.

While the sales tax is regressive in general, when applied to property management I think it gets worse. I hope I am wrong when I assume that renters will end up paying the majority of this property managment sales tax, not the property mangers. I would hope that the Baltimore Delegation in Annapolis will get to the bottom of this as they work to perfect the Governor’s package.

Here is one of the first lessons of economics. Businesses do not pay taxes. They raise prices and the consumer pays the taxes. Of course renters are going to pay an increased rent because the property managment company is going to charge the new 6% sales tax to the landlord. The landlord then has a choice between taking a $60 hit on a notional $1,000/month rental unit or raising your rent. Now the question is how much do you think your rent will go up? $60? Or $100?

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