Gov. Martin O’Malley’s war on the 99 percent

William J. Upton State Affairs Manager, ATR
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Maryland Governor Martin O’Malley believes his state is starving for revenue. Having already taxed Maryland’s wealthiest one percent to the point that they’re fleeing the state, he’s now looking to wage a war of taxation on Maryland’s “99 percent” — to borrow the language of the Occupy Wall Street crowd.

In 2008, O’Malley sought to bail out his state by hiking its top marginal income tax rate. The results were catastrophic. In 2009, the tax returns of one-third of Maryland’s millionaires disappeared. These one-percenters didn’t forget to file, they didn’t make less income and they didn’t all just drop dead. They simply left the state, taking their wealth, investments and businesses with them.

That’s left O’Malley in a difficult predicament. He doesn’t want to cut back on the state’s out-of-control spending — according to the Center for Fiscal Accountability’s annual Cost of Government Day Report, Maryland has had the fourth-highest cost of government two years running — so he has decided to wage war on the 99 percent instead.

This past July, a 50 percent increase in the state’s sales tax on liquor went into effect. The measure was rammed through by Democrat legislators and signed by O’Malley, despite opposition from small business owners and taxpayers. In its first year, it will raise $88 million in revenue on the backs of low- and middle-income Marylanders.

Now, O’Malley is pushing for a $1-per-pack cigarette tax increase. Lifestyle taxes, because they are generally not value-added — as is the case with the cigarette tax proposal — disproportionally affect the poor. O’Malley’s cigarette tax proposal would come on top of President Obama’s 61-cents-per-pack federal tobacco excise tax, which Obama signed into law in 2009.

In addition to increasing taxes on cigarettes, O’Malley wants to increase Maryland’s gas tax by 15 cents per gallon, which is expected to raise $491 million in its first year of implementation. An increase in the gas tax would disproportionately hit small business owners and working families who have to travel in order to find employment in Maryland’s weak economy.

While protesters claiming to represent the 99 percent are occupying Wall Street, Washington, D.C., and cities across the country and decrying the perceived greed of banks and corporations, perhaps they should be turning their attention to some of their supposed allies. Martin O’Malley portrays himself as an advocate for the disadvantaged. In reality, he’s waging a fiscal war on low- and middle-income Marylanders. He was successful in wiping out Maryland’s one percent. Will he manage to wipe out the other 99?

Will Upton is a state affairs manager at Americans for Tax Reform.