A Message From Congressional Candidate Andy Harris

Friends,

Last night was a late and frustrating night. Shortly after 2:30am this morning, the Special Session of the General Assembly ended with the passage of the largest tax increase in Maryland history. I voted against every single tax increase. I even helped lead the filibuster against these new taxes, but sadly the filibuster attempt failed by 1 vote.

The tax-package passed by the General Assembly will increase taxes by $1.4 billion dollars in the first year. Over the next four years, Maryland's hard working families will pay almost $7 billion more in higher taxes as a result of this tax-package. The taxes amount to about $1,222 per person in the state of Maryland over the next 4 years.

Governor O'Malley called the Special Session to solve the long-term structural deficit, but sadly the General Assembly adjourned without solving it. A structural deficit of over $50 million dollars still exists. If slots fail or the economy takes a downturn, which it undoubtedly will as a result of these tax increases; the structural deficit will grow. One of the reasons the structural deficit exists is because the General Assembly actually increased spending. During this Special Session, the General Assembly passed new spending programs to expand state-run healthcare and funding for the bay. No real budget cuts were made because no budget was before the General Assembly. Governor O'Malley can ignore the recommended cuts the legislature proposed when he submits his budget for next year.

Here is a summary of the tax increases passed by the General Assembly:

Sales Tax:
The sales tax was increased from 5% to 6%. This increase will be felt most by businesses on the Shore. Residents on Maryland's Eastern Shore can just drive to Delaware to avoid the 6% sales tax in Maryland. Jobs in Maryland will be lost because of this increase.

Sales Tax Expansion:
The sales tax was expanded to include computer services. Comptroller Franchot believed expanding the sales tax to computer services will hurt Maryland's economy. He stated, "Computer firms form the nucleus of the state's new economy" and that the sales tax "plays into the hands of those who would unfairly question Maryland's business climate.

Surprise New Fee:
A surprise new fee was added to the final bill. The fee for a title certificate will be raised from $23 to $50. Despite O'Malley's statements last summer opposing such fee increases as being to onerous for working families, his tax-package will raise $32 million per year from this fee increase.

Income Tax:
A new progressive income tax was established. Currently everyone pays a flat 4.75% tax on his or her income. The new brackets are as follows: 5% for single filers making more than $150,000 and joint filers (married couples) making more than $200,000, 5.25% for singles making more than $300,000 and joint filers making more than $350,000, and 5.5% for single and joint filers making more than $500,000.

Tobacco Tax:
The tobacco tax was increased from $1 to $2 a pack.

Slots:
Slots will be on the ballot in November of 2008. I sponsored an amendment to ban a slots location in a given county if a majority of the people in that county vote against the referendum. I believe if people in a county do not want a slots parlor in their back yard, the state should not force them to have one. Sadly, this amendment failed.

Each of us has until January 1st to prepare for these tax increases. These tax increases are an early Christmas present from the Democratic leadership in Annapolis (actually, they would probably call it a "holiday present").

Andy