Democratic Crony Capitalists Take Aim at Average Marylanders
Traditional hotels are making a push to require people who rent out their homes to guests to pay the same taxes and follow many of the same regulations that they do.
A bill before the Maryland General Assembly, backed by the hotel industry, is aimed at regulating short-term rentals through Airbnb, FlipKey, VRBO and similar websites. Properties listed for rent on those websites typically include homes or rooms owned by individual homeowners or investors.
Hotels and some rentals pay the state’s 6 percent sales tax, plus hotel taxes, which vary by location between 3 percent and 9.5 percent. Short-term rentals don’t uniformly pay those taxes.
“It equalizes everything,” said the bill’s sponsor, Democratic Sen. Joan Carter Conway of Baltimore, who made her case before the Senate Finance Committee Wednesday. “Everybody else has to pay the tax.”
The travel websites and property owners who use them are pushing back, saying that the taxes and regulations would push them out of business.
This is your typically standard case of little guys having to fight back against the big guys. But this issue realistically affects every individual Maryland property owner and how you can utilize your property.
Websites like Airbnb, FlipKey, HomeAway, VRBO and others are websites that allow you to rent all or part of your property to somebody else. In cities, sometimes people will rent out a room. In other instances, you can rent out your entire house for a period of time, from three days to three months, or more. The idea behind these websites is that it gives property owners the opportunity to monetize their property during instances when they may not be using it. Some people do have dedicated rental properties, but often times property owners offering their properties on these sites rent out their own personal homes or their vacation homes.
The issue at hand, a Joan Carter Conway claims, is to “equalize everything.” The true way to “equalize everything” would be to lower the tax burden on both hotel companies and on individuals who rent their property. That would truly level the playing field, would reduce the cost of lodging across the state, and make Maryland a more attractive place for tourists, conventions, and events. Since this is a Democratic bill, it of course doesn’t do that. It would apply the existing onerous taxes on rental properties as well. But that’s not all. The bill would seem to not only apply to the taxes that are being collected by these properties, but also would require onerous paperwork requirements on behalf of the property owners as well as the websites that are listing the properties on behalf of the owners. Steve Shur of the Travel Technology Association notes:
Shur said that while requiring taxes may be acceptable, it’s unfair to treat mom-and-pop property owners the same as large hotels. And he’s particularly concerned about a provision of the bill that requires rental companies such as Airbnb to book rentals only with property owners who are registered with the state, paying taxes and in compliance with local zoning laws.
It’s impossible for companies “to police the eligibility of every single property in every municipality,” Shur said.
Shur is correct. These major companies are not going to be able to figure out what’s going on with each property in each municipality in each county in the state of Maryland. While Conway’s proposal claims to want to “equalize everything” what it’s real intention seems to be is to make sure that Maryland homeowners do not have the capability to monetize their rental property by forcing companies they could use to rent the property to stop doing business in the state of Maryland.
The worst part of this is the fact that hotel companies seemingly have nothing to gain from the passage of this bill at all. The kind of customer who uses these vacation rental type places are rarely the types of people who want to use a hotel. I use these services frequently when going on vacation, and I always look to rent a full home for my vacation because I don’t want to actually be in a hotel. Whereas many of the hotel customers are looking for the specific type of services and amenities that a hotel offers. You’re not getting a free continental breakfast when you rent somebody’s beach house. The customers uses property rental services and the customers using hotels are generally drastically different.
But that of course doesn’t stop Marriott from continually trying to bully people out of their way and to ensure that more and more money gets collected from taxpayers. Remember, it was Marriott that also pushed the travel tax in 2015 that ultimately became law after the Democrats overrode Governor Larry Hogan’s veto. Once again, the Democrats are playing the role of battering ram for Marriott in order to fatten their campaign bank accounts.
But ultimately it was Joan Carter Conway who introduced this bill, and it’s her who has to answer as to why. Why does she think that property owners should face substantial regulation in order to rent their property? Why does she think it’s imperative that rented property have sprinklers, to be installed at the owner’s expense? Does she really think that national online rental websites will continue to do business in Maryland if onerous regulations and requirements are put on them when listing properties in Maryland. And at the end of the day, what ultimately is the end game of this? Why does she want to regulate the ability of Maryland property owners to rent their properties out of existence.
Ultimately, we know the answer to these questions. We know that Conway and the other Democrats in the General Assembly are crony capitalists of the highest order, willing to do whatever it takes to keep big business donors happy at the expense of small businesses and at the expense of taxpayers. Instead of standing up for the little guy, the Democrats are standing up for corporate interests. And at the end of the day, travelers really won’t be the ones that are affected. It will be the property owners in places like Smith Island, the Eastern Shore, and Western Maryland who will bear the brunt of Conway’s role as a corporate stooge. Those places, without the big boy hotel outfits, will no longer have a place for non-locals to stay. It will reduce the number of travelers to these areas, and it will put even more people out of work in economically depressed areas that Joan Carter Conway has never visited.
The next time the Democrats complain about corporate welfare, remind them of bills like this and every other time that they have stood up for crony corporatism at the expense of average Marylanders.