As Americans prepared to celebrate our independence from Great Britain, the citizens of Maryland were handed a new tax bill on July 1 at a most precarious time.
Still recovering from the government-mandated pandemic shutdowns, households are struggling with soaring inflation and record-high energy prices, and the economy may be on the brink of a recession.
Despite this, the state gas tax rose a whopping 18%, from 36.1 cents per gallon to 42.7 cents per gallon. The new tax propelled Maryland to the fourth highest gas tax in the country. And our legislative leaders did nothing.
Ordinarily, a tax hike may not be so newsworthy—Marylanders are, unfortunately, used to senseless and never-ending tax hikes. From the 20% sales tax increase in 2008 to the “rain tax” in 2012 to the new digital services tax of 2021, Maryland’s overall tax burden has crept up near the top quintile of all states, ranking just behind California and Illinois.
Even worse, Maryland ranks third highest in the country for individual income tax as a percent of personal income. As a result, Maryland’s low-income families are struggling, and the wealthy are fleeing in record numbers. It is no surprise that the IRS’ latest publication on taxpayer migration showed Maryland a major loser of wealth migration—coming in 44th place of the fifty states and losing $1.9 billion in adjusted gross income.
But this tax increase is different from the earlier ones. It’s a gas tax that comes at a time of historically high gas prices and when the state has the largest budget surplus in history. It is not enough for state politicians to have a record $7.5 billion budget surplus from these taxes—no, they want more. Rather than view surplus funds as the “people’s money” and implementing tax breaks or economic relief, many of our legislatures see it as the government’s money, primed for spending on political pet projects. The legislative leadership blames big oil companies for exploiting consumers and making “record-shattering profits.” This argument is just a distraction—oil companies make about 7 or 8 cents per gallon of gas while the state now takes 42.7 cents. Who’s exploiting whom?
The gas tax is regressive: it will hit struggling low- and middle-class families and small- to medium-sized businesses the hardest. Furthermore, it’s just one more reason for the wealthy tax base to flee to Florida or Delaware or the forty other states with a lower tax burden. Maryland will not remain competitive and attract talented people and new businesses to the state with an increasingly heavy tax burden crushing it.
Even Maryland’s Comptroller says the state can afford a four-month gas tax holiday to provide immediate relief without jeopardizing funding priorities. What’s the point of having this “rainy day fund” if you will not use it when it rains? Implementing a four-month gas tax holiday seems like a commonsense solution to provide the timely tax break that all Marylanders desperately need. Unfortunately, we have not learned from our past.
When the Declaration of Independence was drafted, it not only contained the familiar lines we are taught to memorize in school, such as “We hold these truths to be self-evident, that all men are created equal,” but lesser-known, it also contained a list of grievances the colonies had with Great Britain that was the impetus for independence. Of these grievances, deep in the text of the Declaration of Independence, it states that King George was a tyrant “For imposing Taxes on us without our Consent.” Marylanders fought and died in the Revolutionary War not only for independence but for lower taxes.
Marylanders will not fight and die over this gas tax, unlike in the Revolutionary War. However, they will vote. Will the gas tax have election implications so close to voting day? The “rain tax” cost Lieutenant Governor Anthony Brown the governor’s seat in 2014 to Larry Hogan.
With primary elections only two weeks away and the general election right around the corner, Marylanders should remember who caused the unnecessary pain at the pump when casting their vote.