A litany of issues, large and small, has made our slice of the world think about how it is represented in Annapolis and DC. Surveying the lay of the land, there are two prevailing schools of thought. The first school professes that the 36th is best served by those who possess the ability to “speak Democrat.” The other school professes that the 36th is best served by a proverbial nailing of Martin Luther’s 95 theses to the doors of the General Assembly. I suppose that in its simplest form, we are told that our choice is between a left and a right.
This false dilemma is not unique to the 36th District. A movement is afoot to create the State of South California. Back here on the right coast, similar murmurs can be heard. Of course, there really is no serious proposal to create the State of Delmarva. If anything, such talk is the ultimate visceral reaction. Keeping the school metaphor alive, secession talk is the PhD program of the second school.
While some have placed this bit of bandwidth in the visceral column, Troup’s Corner actually seeks to open a third school. This school professes that a position can be articulated within the confines of Annapolis’ rules while preserving the self-sufficiency tenet of conservatism. The battle between the school on the right and the school on the left ensures that Maryland’s government remains top heavy, leaving little room for disadvantaged areas to become economically viable. This is why opening the school of up has become critical.
The Eastern Shore’s economic woes were recently positioned in a wonderfully succinct manner. Our area suffers from a trade deficit with the State of Delaware and the I-95 corridor. There is a population of people crossing the Bay Bridge to work, eating at those restaurants, and consuming other services over the course of the daily routine. There is a population of people crossing into Delaware to make purchases of goods without sales tax (let’s ignore the use tax element for now and deal with reality). Maryland sees sales tax revenue from the first population. Delaware sees job creation and realizes hidden revenues from the second population.
Local Chambers of Commerce have no control over the State’s sales and use tax statute. The one weapon in their arsenal is an appeal to buy local, which becomes a form of guilt. But can anyone really blame consumers? Think about inflation and the CPI from one year versus the next. Now think about six percent, day after day.
Think of this from the State’s point of view. They need revenue. The State levies taxes on a variety of fronts, essentially hedging their bets when incomes or property values go down. Because consumerism accounts for so much economic activity, sales taxes have been seen as a lucrative means of taxation.
The dirty secret of sales and use tax, as currently constructed, is that it is a regressive tax. Lower income earners spend a higher percentage of their income. As a result, the six percent affects them more than the higher income earner.
The sales tax is also rooted in an economy born out of Industrial Revolution America. Maximum revenue is predicated upon the production and consumption of tangible goods. Our economy has transitioned from a goods economy to a service economy. This leaves a sector of the economy to operate somewhat tax free.
The sales statute, as written, contains loopholes when viewed from a 21st century perspective. For example, software you purchase from a retailer is an actual thing (a CD), and is assessed sales tax. Businesses often purchase software licenses from major providers (Oracle, SAP, etc) and usually have it made available to them via download. Currently, that is a service. Where are many of the businesses purchasing thousands of downloaded software licenses located?
So the challenge has been created – how can the State protect its revenues and foster and environment that promotes commerce across the State? One solution is to transition from a traditional higher percentage sales tax and move towards a lower percentage value added tax (VAT). In other words, spread the tax burden across the various sectors of the economy by applying the tax uniformly and at a lower rate. The result would be revenue for the State that is shielded from shifts in the economy, and an incentive for shoppers to conduct their business within the borders of the Old Line State. Ask yourself if $3 per gallon is worth burning in Delaware to save on a two percent tax?
If more transactions were to be conducted on this side of the Mason-Dixon, it would provide an incentive for landlords and developers to refurbish their dilapidated buildings, as well as an incentive for recognizable players in the retail sector to fill the commercial vacancies found up and down the Eastern Shore.
The specifics of such a proposal could get watered down. For sure, medical care, legal defense, education, and electricity for the heating of homes are vital services that would send the wrong message if taxed. On the other hand, what treatment should be given to elective procedures, civil lawsuits, and electricity to power a television?
Another obstacle is the learning curve for the accounting and small business worlds. While a VAT system does away with subjective exemptions, it does allow for taxes paid to be offset against taxes collected.
In the end, the revenue realized would be indicative of the economic activity that occurs in the State. In addition, fair and competitive taxation will close the trade gap between the Eastern Shore and the State of Delaware, which will limit the public money that needs to flow to the region to prop up the lower economic quintiles.
We must come to the realization that Maryland, despite its small stature versus the likes of California, has its own challenges when it comes to governing a physically and economically diverse State. The solutions can no longer come from discussions of right or left. They must come from discussions of up versus down, or as our local broadcaster on WCTR has positioned it, fixes that originate from the bottom up. I turn it over to our readers to determine in which direction this idea points us.
Troup’s Corner Non-Sequitur: Yet another debate took place over the use of speed cameras on the Upper Shore. TC’s official position is this: so long as there is a platform that allows the accused to confront their accuser, then the cameras probably do a better job of uniformly citing scofflaws than the traditional traffic stop. How many times have you witnessed a moving violation whilst alongside or behind an officer’s vehicle. If there are extenuating circumstances, it seems that the old saying is “tell it to the judge.”
It should also be noted that the cameras are triggered at 42 mph in a 30 mph zone. This is essentially allowing an excess of thirty percent. I was baffled by the number of people who had difficulty in calculus with the term “limit.” I could see the ambiguity if the signs said “Integral 30 MPH.” All that said, a discussion of speed limits in Maryland versus other areas is valid. Given the increased safety of our vehicles, do some limits remain artificially low for the purpose of revenue generation?
Every time you have the answer, I change the question!
Write a Letter to the Editor on this Article
We encourage readers to offer their point of view on this article by submitting the following form. Editing is sometimes necessary and is done at the discretion of the editorial staff.