Voters Approve Tax Increases -- Under Some Conditions


Responsive governing requires a close and attentive ear to public opinions and expectations. This is doubly true when troubled economic times pit potential winners and losers against each other in hard-ball state budgetary politics. This forces Maryland elected officials to make choices that please none of the players and may well injure long-term state interests.

The Schaefer Center for Public Policy at the University of Baltimore conducted such a comprehensive survey in December issues dealing with the state budget crisis, taxation and services. Surveyors interviewed 844 registered voters who had participated in recent statewide elections.

What did these voters tell us? We found a Maryland electorate that:

* Considers itself informed and concerned about the present fiscal crisis;

* Voices considerable suspicion of overall government efficiency and effectiveness;

* Grudgingly accepts selected tax increases while feeling over-taxed and under-serviced;

* Strongly supports experimenting with non-traditional fiscal strategies, and

@4 * Promises to watch carefully come November '94.

Informed and Concerned

The importance the public attaches to the state fiscal crisis is stunning.

A 62 percent majority responded that budget and taxes were the single most important problem facing the Maryland General Assembly. This reflects a massive opinion shift from an October, Sun Poll. Responses then were scattered across a wider range of categories with a modest 22 percent plurality mentioning the economy and only 16 percent saying taxes were the most important issue.

Furthermore, in our survey, 78 percent of the registered voters said that Maryland's fiscal problems were "very serious" and 60 percent reported they are "paying a lot of attention" to the budget crisis. A miniscule 5 percent said they are not paying much attention at all. Clearly, public opinion has focused on Maryland's fiscal woes and voters are watching Annapolis'

struggles with far more than normal attention.

Government Performance

While Maryland voters are paying attention, they don't express much confidence in elected officials' ability to deal with state problems. In fact, a majority would probably agree with humorist P. J. O'Rourke's position that "giving money and power to government is like giving whiskey and car keys to teen-age boys."

Only 13 percent thought the problem-solving performance of government was excellent or good, 47 percent rated it only fair, ++ and 38 percent rated it poor.

Perceptions of government wastefulness were also conspicuous in the survey. About 63 percent of the voting population said that "government wastes a lot of money," while another 32 percent said the government "wastes some." Only about 3 percent say the government "does not waste much money at all."

Surprisingly, in households with state and local government employees, 65 percent said that government wastes a lot of money.

Two programs appear to bear the brunt of criticism: welfare (cited by 23 percent as being the most wasteful program) and highway/transportation (15 percent).

As for paying taxes, 77 percent of the respondents think the tax system in inequitable in that all income groups do not pay a "fair" share. Further, 63 percent of the respondents felt that they received less from government than they paid for, and 57 percent said that taxes in general were too high when compared to the services provided.

We discovered considerable variation in attitudes toward different types of taxes. While the property tax stands out as the least agreeable form of tax, with 60 percent reporting it was too high. In contrast, only 19 percent said the sales tax was too high.

These findings correspond closely to opinion research in other state and national surveys. The property tax is normally cited as the "least fair" tax and analysts surmise that the method of collection (a single tax bill) contributes to public antagonism. Taxes that exact smaller and continual payments and with discretionary elements, such as the sales tax, are usually perceived as much less offensive.

Taxes and Spending

Contrary to conventional wisdom, Maryland voters do not strongly prefer spending cuts to new taxes. In fact, 38 percent of the respondents said the state should deal with its fiscal problems by raising taxes, while 30 percent said services should be cut. Another 23 percent said "some of each," meaning 61 percent find the possibility of some tax increases acceptable.

If tax increases are to be the order of the day, what kinds of taxes would voters accept? Our analysis suggests that voters find some kinds of taxes acceptable but constrain legislators to a narrow range of options. Only one tax gets overwhelmingly popular support -- an increase in taxes on cigarettes and liquor, with 87 percent of voters approving. Two more get relatively high support: increasing taxes on businesses (59 percent) and taxing professional services (56 percent).

More interesting are the taxes that are strongly opposed by registered voters. These include the 78 percent opposition to increasing taxes on utilities, 83 percent to increasing property taxes and 71 percent to raising the income tax. However, 63 percent would favor an income tax hike on those with annual family incomes over $50,000.

On the other hand, if budget cuts carry the day, where do voters think the economies ought to be achieved? When afforded the opportunity to cut state programs, Maryland voters were, for the most part, reluctant surgeons. The only programs or areas for which a majority approved reductions were the number of state employees, highway programs, and parks and recreation.

The more sacrosanct programs were police protection, public education, and medical assistance to the poor with 13 percent or fewer respondents favoring cuts.

Sales Tax Support

Two strategies that have figured prominently in discussions of how the state can raise additional revenue are: (1) to increase the current sales tax by 1 percent, and 2) to broaden the sales tax base. Almost 70 percent of Marylanders surveyed voiced support for a 1 percent sales tax increase.

As for broadening the sales tax base, respondents tended to prefer adding sales taxes on things which had the least visible impact on themselves. Years ago Sen. Russell Long sang, "Don't tax you, don't tax me, tax that fellow behind the tree." Contemporary Marylanders join the chorus. As such, 71 percent supported placing a tax on the sale of manufacturing equipment, another 71 percent supported taxing of computer programming and data processing services, and 65 percent supported taxing the provision of engineering services. In addition, 57 percent of the respondents favored placing a sales tax on accounting services and 51 percent favored broadening the tax base to include legal services.

In short, the respondents tended to favor taxing those items considered business-to-business transactions.

New Approaches

Maryland voters were favorably inclined to new ideas for solving the state's fiscal dilemma. We asked about three ideas that have enjoyed considerable discussion during this political season: earmarking taxes, applying or increasing user fees, and privatizing some government services.

Supporters of earmarking have argued the political acceptability new taxes if they were dedicated to specific, popular programs. Opponents have worried about removing budgetary flexibility by tying up revenues. After having these arguments described to them, 49 percent said they thought earmarking was a good idea while 37 percent disagreed.

A second approach often discussed is the imposition of new user fees or the increase in fees currently charged. Our results show that some fees would be very popular. For example, 76 percent approve placing additional charges on hunting and fishing licenses, and 82 percent approve of increased fees for the use of public marinas and boat ramps. A majority also approves of placing additional fees on entrance to state parks, entrance to museums and participation in recreation programs. The areas receiving the least approval were charges to use public libraries (15 percent approval) and increased tuition at state universities and colleges with (25 percent).

Privatization is the transfer of public services to private agents. The argument for privatization is that it is a way of increasing efficiency by reducing the size of government. Privatization initiatives met with fairly high, across-the-board approval. Majorities favored contracting out of collection of recyclable materials (81 percent), trash and garbage collection (71 percent), collection of child support payments (62 percent), caring for the mentally ill (58 percent) and operating prisons (51 percent).


The political cost of these decisions is measured in how voters respond. Among the Maryland electorate, 36 percent of the voters suggest that tax and spending positions are the single most important issue influencing their choice of candidates. Another 65 percent of voters suggest it is important, but that is only one among a number of issues that will influence their vote. Only about 5 percent of the respondents said it will not influence their vote at all.

Maryland is not alone in facing fiscal woes. In state after state, hiring freezes, furloughs and deep budget cuts accompany soaring costs for welfare, Medicaid and corrections.

All this is played against a backdrop that assumes voters are anti-government and anti-tax. While our survey does not dispute the anti-government mood, it does reveal that voters are not as profoundly anti-tax as popular mythology suggests -- especially when vital state services are on the line.

The mood of the Maryland electorate on tax issues is decidedly subtle. No evidence suggests taxes in general are popular. However, there is substantial support for broadening the sales tax, sin taxes and taxes on upper incomes. General increases in income taxes and property taxes are clearly unpopular.

The image that emerges from this survey is one of a moderate and thoughtful electorate, informed and concerned, skeptical of state government but dependent on and supportive of its major programs.

It is snapshot of an electorate looking to Annapolis for leadership but wondering if it will emerge. Edmund Burke was certainly correct over 200 years ago when he noted that the power to both tax and please is not given to government. The General Assembly may well discover that reasonable tax increases coupled with selective and focused budget cuts, while not pleasing, will prove acceptable to Maryland voters.

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