A warning about the fiscal ruin that results from aggressive and excessive taxation and spending is coming to Maryland - and its greatest offender, Montgomery County - from a state known for its coffee, grunge music, and Communist autonomous zones. The scariest part is that Maryland and MoCo are further down this road than Washington state. But due to a series of radical left turns, the Evergreen State appears determined to adopt Maryland tax-and-spend policies at an increasing clip. The saga doesn't just remind us that we can't keep going with tape over the Check Engine light on Maryland's fiscal dashboard, but of the proven economic development boost that comes from a competitive tax policy.
"For decades, Washington state's economic advantage was its lack of a personal income tax," Ryan Frost and Mark Harmsworth write in an op-ed in The Washington Post. "Washington built its economy by attracting companies such as Microsoft and Amazon with no income tax." Some elected officials in the state have apparently grown tired of winning, though. "Washington state Democrats, who have largely controlled the state government for 40 years, are now proposing an unconstitutional income tax." Unconstitutional? I like the sound of that. Give Washington's Supreme Court credit for reaffirming that income taxes are illegal and unconstitutional way back in 1933. Where's our William J. Millard?!
Taxes can not only be illegal, but ill-advised. "Seattle recently imposed new payroll taxes, and businesses responded by relocating to neighboring cities," Frost and Harmsworth explain. "An income tax would make that exodus statewide. High earners are already leaving Washington amid the recently enacted taxes, and those moving in earn substantially less than those departing."
Maryland has already seen this happen. Montgomery County dropped off the Forbes Richest Counties in America list many years ago, and watched its vaunted "Montgomery County's Rodeo Drive" in Friendship Heights devolve into vacant storefronts, aging apartments, and smashed-up bus shelters, as the ultra-wealthy fled to lower-tax jurisdictions in the region. Businesses have relocated to Northern Virginia. And, like Washington state, the residents moving into MoCo and Maryland are mostly low-income.
But Washington state isn't just aping our massive tax burden, which is the largest in the D.C. area. They've also got the same crack addiction to spending that our County Council and state legislators have had since 2002. Washington state has a multi-billion dollar budget deficit just one year after the largest tax increase in state history. "The pattern is predictable: increase taxes, allocate the revenue to permanent new obligations and then point to the resulting 'shortfall' as justification for the next tax hike," Frost and Harmsworth summarize in a nutshell.
Sound familiar? Annapolis started with a "millionaire tax" in 2012. Only two years after that tax hike, there were 1000 less such "millionaires" filing tax returns in Maryland, tanking state revenue. Current Maryland Governor Wes Moore walloped Marylanders with IT taxes and massive fee hikes for vehicle registration last year. The Montgomery County Council kept a disastrous energy tax and absurdist tax on the rain(!!) in place, while adding annual property tax hikes and a gargantuan recordation tax to the burden of homeowners.
And like their fellow spending junkies on the West Coast, the appetite of our elected officials to burn through taxpayer cash has only increased alongside the taxes. The Montgomery County Council has more than doubled the County budget over a mere decade. Their counterparts in Annapolis found a "permanent new obligation" in a reckless waste of money known as the "Blueprint for Maryland's Future," which is really a blueprint for teacher's union endorsements for the legislators who voted for it with the full knowledge that it would bankrupt the state in the next decade.
As Frost and Harmsworth correctly diagnose the illness, "the problem isn't that citizens aren't paying enough. It's that the government has lost the ability to say no." Have voters in Montgomery County and Maryland also lost the ability to say no to our incompetent and corrupt elected officials? Election results so far this century would suggest they have. Is there a breaking point, a level of taxation that's too high, or a realization of impending fiscal doom that can provide a smelling salts moment?
To paraphrase the op-ed authors, "Maryland is no longer a shining example of how to build a prosperous economy. It is a case study of how to dismantle one."
