Maryland Tax Freedom Day Needs to Come Even Earlier Through Spending Reform

Tax Freedom Day in Maryland came Sunday, April 19, a full nine days earlier than it did last year. Calculated by the Tax Foundation, Tax Freedom Day is the number of days Americans work to pay their federal, state and local income taxes.

Marylanders this year will labor five days longer than the average American to pay off their tax burdens. But the average number of tax working days are down across the nation, the Tax Foundation, says because "the recession has reduced tax collections more than it has reduced incomes" and the federal stimulus package includes some large temporary tax cuts.

The thousand plus rain-soaked tax protesters who crowded the Annapolis dock area last Wednesday, April 15, clearly felt they were "taxed enough already" – hence the TEA party.
Not many would have been reassured that overall they were working fewer days to pay their taxes, because too many Marylanders were working less than they wanted to. On Friday, officials announced that unemployment in the Free State had reached a 17-year high of 6.9%. That means a lot of people will be paying a lot less taxes in the coming year.

This will likely mean even lower revenues for the state and its counties. The structural deficits that have been projected by the General Assembly's Department of Legislative Services will likely get even higher than the $8 billion estimated over the next four years.

That makes even more relevant the call for spending mandate reforms to cure the structural deficits in a Perspectives paper I did for the Free State Foundation.

You may have heard that the "structural deficits" caused by mandatory spending increases had been cured by the "hard choices" to pass $1.3 billion in Maryland tax increases in November 2007. Unfortunately, the recession started the next month. As legislative analysts pointed out in early April, from fiscal 2006 to fiscal 2012, general fund revenues are projected to have grown by 17%, while spending went up twice that rate over those six years, plainly unsustainable growth.

What to do? Raise taxes again? Not when Maryland's Tax Freedom Day is the 5th latest in the nation.

No, the solution is the reforms of the spending mandates, formulas, entitlements, pensions and health benefits I recommend in my paper. Many of them should be frozen at current levels. Much of this spending has inflation factors such as cost-of-living increases built into them. They need to be tied more closely to revenues so Marylanders don't have to work any longer they have to pay for government.