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March 25, 2003

Increased Tax Initiatives Will Burden Citizens Further

John W. Ashbury

Does it amaze you that Democrats who bemoan their label as "tax and spenders" continue to put forth proposals that reinforce that identification?

Last week two issues arose from the Democratic bastions in both Winchester Hall and in the House of Delegates that will - if implemented - raise the ire of more than just a few taxpayers across the state, and particularly here in Frederick County, where the last board of county commissioners raised the property tax nearly 11 percent and the piggy-back income tax 16 percent.

First, there was Commissioner Jan Gardner's balloon to impose a tax on all buyers of new homes. For single family purchasers, the rate would be $12,342. For townhouse buyers, the new fee would be $8,196. She says these new taxes would replace the impact fees currently imposed to defray the costs of school construction and libraries.

Lest we forget, Ms. Gardner is the Democrat commissioner who, when the county raised the property tax rate three years ago, actually proposed that the approved 20-cent rate on each $100 of assessed valuation be raised an additional 4 cents to "create a surplus for the next year's budget talks." Are you really kidding? We're gonna increase taxes this year to provide a surplus for next year?

Wonder of wonders, two of her fellow commissioners went along with that idea - David Gray and Terry Rhoderick. When the fire storm hit after the vote, the commissioners designated that funds raised by that 4-cent increase to create a surplus go to the transportation needs of the county.

Now Ms. Gardner, along with Commission President John L. "Lennie" Thompson, are determined - as they were during their first term in office - to slam the door shut on anyone who wants to move into Frederick County, and to deny the children of those who are already here, and living at home with their parents, the ability to buy a new house in the county.

And they are furious with their fellow commissioners for approving a water/sewer reclassification for projects within Frederick City. They are doing their best to reverse that decision by every means at their disposal, even to the point of circumventing the law if possible.

Ms. Gardner's proposal would add an outrageous additional charge to the purchase of a new home. Likely it would be amortized over the life of the mortgage on a single family house. That would mean an increase of more than $400 per year (or $34 per month) to a 30-year mortgage, plus additional interest. What is surprising is that her proposal makes no provision for the size of the dwelling. The new tax would be applied to a 3,500 square foot house, the same as a 1,000 square foot house. Now that seems hardly fair.

The stumbling block to Ms. Gardner's idea is getting two other commissioners to go along. And then she has to get the county's mostly Republican delegation to Annapolis to endorse it as well. Unlikely!!!

Meanwhile, in Annapolis, the House of Delegates approved a series of "budget-balancing" taxes which sponsors believe will help close next year's deficit without the necessity of allowing slots. Remember that House Speaker Michael Busch (D., Anne Arundel) is an ardent opponent of slots.

But even with these new taxes, approved overwhelming by the Democrats in the House, won't fully close that budget gap. Although more cuts will still have to be made, the ones already made are said to be deeper that those suggested by Governor Robert Ehrlich.

Delegate Al Redmer (R., Baltimore Co.) was quoted as saying the Democrats forced their party members in the House "to walk the plank" on the new taxes bill. One of the new measures is an increase in the filing fee every corporation must pay each year to the state. Currently every company pays $100, no matter its size. This new bill would create a sliding scale where the largest companies would pay up to $20,000 per year.

This bill also imposes a 2 percent tax on HMO insurance premiums. This would, therefore, increase the premiums for those seeking medical insurance coverage from an HMO. Loopholes which allow corporations to shift certain assets to shell corporations in Delaware, also would be closed.

As this bill was making its way through the House, Delegate Howard P. Rawlings (D., Baltimore) chairman of the Appropriations Committee, was still pushing his idea to increase the sales tax by 20 percent and attaching it to any bill approving slot machines.

Such a step would put the Governor in an awkward position. While he says he wants slots approved, he has said time and again he will veto increases in sales and income taxes.

Already looming on the horizon is an increase of 5-cent per hundred dollars of assessed value on your state property tax to defray debt service costs. The current rate is 8-cents per hundred, which is supplemented by money from the general fund to pay off the state's bonded indebtedness. This represents a 62.5 percent increase. On a home with an assessed of $100,000, the owner will pay another $50.

It will never cease to amaze conservatives, both Democrat and Republican, that so many office holders never see the need to live within their means; to only increase revenues when absolutely necessary; and never during a downturn in the economy.

President Reagan forced through a major tax reduction during his first term in Washington, and tax revenues skyrocketed. What seems likely to happen here is the exact opposite.

When forced by the economy to live with less, citizens have always cut back on what they spend. When they do so, state and federal coffers dwindle. And lawmakers have shown a knack over the years of increasing the tax burden to raise additional revenues, little realizing - or caring about - the negative effect it will have on citizens.

Just remember, that in their drive to shut down residential growth in Frederick County over the past decade, commissioners like Mr. Thompson and Ms. Gardner have created a unintended consequence of having the county issue more building permits in the last four years that in the eight years that preceded their rise to public office.

Now, isn't that special?

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