Carroll County’s elected officials say businesses and the working class will suffer if a sales tax expansion proposal by House Democratic leaders, intended to help fund educational upgrades, becomes law.
“This really scares me as we start to look into our budget,” said Commissioner Richard Weaver, R-District 2, at the Board of Commissioners meeting Thursday.
The legislation, proposed Wednesday, would expand the sales tax to include many professional services that go currently untaxed — such as legal services, accounting and engineering — while cutting the rate across-the-board from 6 cents on the dollar to 5 cents, The Baltimore Sun reported.
State Sen. Justin Ready, R-5, said he’s ready to vote against the bill if it comes to the Senate.
“It’s a big fat ‘no’ for me,” Ready said in an interview Thursday.
Del. Eric Luedtke, a Montgomery County Democrat who is House majority leader, said the bill would bring in an estimated $2.6 billion in new revenue by 2025, the amount needed to pay for sweeping, expensive legislation meant to boost Maryland’s public schools, according to the Sun.
The Commission on Innovation and Excellence in Education, more commonly known as the Kirwan Commission, has proposed a $4 billion annual plan to overhaul Maryland’s public school system. Last year, lawmakers approved funding the first three years of the plan. Carroll County elected officials have expressed concern over how the state plans to pay for it.
Michael Fowler, Carroll County’s legislative liaison, updated the commissioners Thursday. He said the bill suggests taxing services such as: cleaning and storage, golf course and country club memberships, marina services, art moving and storage, tattoos and piercing, tanning, interior design and decorating, dog walking, watch and jewelry repair, air transportation, travel arrangement and reservation services, and lobbying.
“It goes to show that the more we tax, the more that [Maryland] is becoming less business friendly,” said Commissioner Stephen Wantz, R-District 1.
Added Commissioner Ed Rothstein, R-District 5: ”Business and economic development and growth in the state is going to be hit very hard.”
Ready recalled the tax increases during Gov. Martin O’Malley’s tenure and said this proposal is worse.
“Based on the impact it would have on the economy ... it is a beyond horrible idea,” Ready said.
Also in opposition are Del. Warren Miller, R-9A, and Del. April Rose, R-5.
Miller, who represents part of Carroll and Howard counties, said those counties are already offering the high-quality education the Kirwan Commission is trying to achieve elsewhere in the state. He’s not convinced the Kirwan proposals would change much for Carroll and Howard.
“People are fed up with what they have to pay now,” Miller said in an interview. “I just think our taxes are already incredibly high in Maryland.”
Rose said she’s met constituents who have an exit plan to leave the state when they retire or even sooner, due to the tax rates imposed by the state.
“It’s an insatiable appetite for taxing our people,” she said in an interview. “We really have an unfriendly business environment in the state of Maryland and this is going to just make it worse.”
Del. Haven Shoemaker, R-5, expressed his displeasure in a news release issued Friday morning.
“What’s really disturbing about this tax-hike scheme is how regressive it is,” Shoemaker is quoted as saying in the release. “It will disparately impact poor and middle-class folks every time they seek the services covered under this scheme. And it certainly isn’t just the rich who get their hair done, or have their taxes prepared, nobody will be immune from this tax-hike.”
Shoemaker, a lawyer, seemed worried people would not be able to afford attorneys.
“It isn’t just rich folks who need attorneys,” he said. “This proposal, though, would make it far more unlikely that the poor will be able to afford legal services when they need to.”
Del. Susan Krebs, R-5, is feeling a sense of déjà vu. Krebs said she voted against taxing professional services in 2007, a move that came about to fund the improvements laid out by the so-called Thornton commission, which also sought to upgrade statewide education. The tax expansion was repealed before it could come into effect due to blowback from businesses, according to Krebs.
Unconvinced the Thornton commission’s efforts made any significant difference, Krebs worries the Kirwan plan and similar sales tax expansion proposal will also fall short of expectations.
“This is basically a tax on working families. It’s a tax on working moms,” Krebs said. “It’s unbelievable.”
Wantz: Elected officials disrespected
During a six-hour-plus hearing in Annapolis Monday, about 130 people signed up to speak on the Kirwan legislation, according to Fowler, and some had a long time to wait.
The House Ways and Means Committee, House Appropriations Committee; the Senate Health, Education, and Environmental Affairs Committee; and the Senate Budget and Taxation Committee met jointly, Fowler said.
“The way they set this up was to have the elected officials first, but only the elected officials that signed up as supportive of the bill,” Fowler said. “The rural elected officials were signed up with a letter of information, so they weren’t offering support or opposition, they were offering information. So the way it was structured, it went: supporters, opponents, letter of information.”
The Maryland Association of Counties presented a letter asserting that the state priority of Kirwan should rely on state funding, rather than an increased reliance on county funding.
Officials from Cecil, Caroline, and Kent counties were among the last to speak, while those from Queen Anne’s and Talbot counties left before they had their chance, according to Fowler.
”Six hours is a long time to wait,” Fowler said.
Wantz deemed the treatment of his colleagues as disrespectful.
”It was right down party lines, which is what they are making this. And that’s a sad state of affairs,” Wantz said.
Wantz planned to speak at the hearing, but changed his mind days before because he suspected it would turn into a “freak show,” which it did, he said.