Archive for the ‘taxation’ Tag

Why I’m voting NO on Maryland’s slots referendum

Maryland's flag is one of the best in the Union

Maryland's flag is one of the best in the Union

With Maryland certain to cast its 10 electoral votes for Barack Obama in tomorrow’s presidential election, the most controversial state-wide ballot question is the Constitutional amendment that would legalize slot machines at five locations in the state.  The purpose of the measure is to raise tax revenue for education, but, after a lot of thought, I am going to vote no on the amendment and urge my fellow Marylanders to do likewise.

The problems with gambling are well known: gambling addiction, increased alcoholism and bankruptcy, and the potential for increased crime and family problems.  Treatment and response to these issues could cost $228 million to $628 million annually, absorbing some of the revenue the state would gain through legalizing slots.  Liberals and those interested in social issues should note that these challenges all fall most heavily on the poor, both because they can least afford to gamble and because these taxes are very regressive, they take a much larger percentage of a poor gambler’s income than of a rich one’s—and this is after the General Assembly just increased the regressive sales tax by 20%.  There are good reasons why our state Comptroller, Peter Franchot, opposes the measure.

These are bad for Maryland

Don't believe the hype; these are bad for Maryland

Just as importantly, the many promises of the pro-slots side are unlikely to be fulfilled.  The revenue estimates were made before the current economic downturn and are therefore too high.  Additionally, some of those estimates assume that 100% of the money that Marylanders currently spend on slots in neighboring states will be spent in-state if the measure passes, clearly an unreasonable assumption.  The money won’t be staying here in the Seventh State; the biggest beneficiaries of slots will be wealthy, out of state license holders and horse breeders, not our school children and local business owners.  Many stores and restaurants near the gambling locations will suffer, as just about every dollar stuck in a slot machine is a dollar that would have been spent elsewhere.  And the five locations that slots would be limited to under the current measure are not particularly good spots for such devices; it’s quite possible that this amendment is only allowing slots their foot in the door before a future measure will be needed to fix this one and make slots even more profitable.

Fiscal conservatives may want to note that this measure doesn’t just raise an existing tax, or create a new tax; it creates an entirely new industry—that brings with it all sorts of economic and social problems—just so the state can tax it.  And, since money is the most fungible of all resources, in the future this will probably result in a net increase in state spending, since general revenue dollars that otherwise would have been needed for schools will then be free to be spent elsewhere.  Conservatives like me should also be concerned about subsidizing the horse racing industry.  If I were going to give welfare to an industry, it certainly wouldn’t be one that is non-vital and essentially a form of entertainment.

The Washington Post joins me in urging Marylanders to oppose slots.  You can read their editorial here, and they provide additional information about the issue here. See also what the non-aligned Ballotpedia has to report about the measure.

The revenue raised will likely be much lower than advertised, and less than half the profits would go to education in any event.  Besides, it’s immoral to balance the state budget on the backs of the poor with a regressive tax like this.  The biggest gainers if we amend our Constitution for this will be already rich out of state casino owners who won’t have to worry about the problems we’re creating for ourselves here.  Maryland did well to get rid of slots in 1968; let’s not bring them back in 2008. Vote NO on Question 2.

Thoughts on progressive taxation, redistributing wealth

Here is a quick, multiple choice, quiz.  First, consider the following quote:

The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.

Now, who said that?

(A) Karl Marx
(B) Vladimir Lenin
(C) John Maynard Keynes
(D) Adam Smith

I’ll get to the answer shortly. I bring it up due to recent discussions on the “redistribution of wealth” in the context of the imminent presidential election.  Specifically, John McCain criticizing Barack Obama for wanting to “spread the wealth around” and such.  But, as a recent Slate article points out,

Government redistributes wealth to some extent by its very existence, since it’s impractical for citizens to pay for or benefit from it in equal proportion, even if that were desirable. So long as you have a system of taxation and a spending on public goods like education and roads, some people will do better in the bargain than others.

The same article points out that McCain himself supports all sorts of programs that unquestionably distribute wealth, including inter alia Social Security, Medicare, and the Earned Income Tax Credit.  And he opposed President Bush’s 2001 tax cuts on the grounds that they unfairly favored the rich.  (He has since changed his mind.)  And then there’s McCain’s hero, Theodore Roosevelt, who said this:

We grudge no man a fortune in civil life if it is honorably obtained and well used. It is not even enough that it should have been gained without doing damage to the community. We should permit it to be gained only so long as the gaining represents benefit to the community. … The really big fortune, the swollen fortune, by the mere fact of its size, acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and … a graduated inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate.

Slate argues, in another article, that McCain should either stop calling Teddy Roosevelt his hero or should stop calling Obama a Socialist. T. R., after all, supported the 16th Amendment which authorized progressive income taxes.  That first Slate piece then critiques claims that, while McCain’s redistributive policies are okay, Obama’s are far different and go too far.  But if you’ve read that article you already know that.

McCain might call this man a Socialist for wanting to redistribute the wealth of nations

McCain might call this man a Socialist for wanting to redistribute the wealth of nations

And you also know the answer to the question which lead off this post.  So, who did say that people “ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities”?  Was it Karl Marx?  Or Lenin? Hopefully you didn’t guess either of them; they weren’t very big on any sort of private revenue at all, let alone protecting it with the state, whose existence Marx disdained.  So it must have been Keynes, right?  Nope.  The correct answer is (D) Adam Smith. The quote is straight from The Wealth of NationsBook V, Chapter II, Part 2 to be precise.  If, like me, you own the Modern Library edition you’ll find it on page 888.  I was pleased to see that I’d underlined that particular passage when I had last read the work.

Anyway, arguments against progressive taxation have long seemed a bit inconsistent to me.  Bill Gates must pay at least tens of thousands of times as much as I do in income taxes. But does he get tens of thousands of times more use out of the Interstate Highway System?  Does the U.S. Army protect his freedoms a million times more than they do mine?  Sure, he’s got more property to protect, but we’d both be about equally upset if the Canadians invaded and destroyed our homes.   So, unless you want a poll tax, where everyone pays the same dollar figure regardless of income, or to have everything based on user fees, you are in favor of redistributing wealth.  But, don’t worry, you’re in good company.