Cyber Monday highlights need for internet sales tax

After the travel, after the turkey and stuffing, and after the Black Friday (or is it Thursday?) sales, comes Cyber Monday. In the days before widespread home internet access, this was the day when shoppers returned to work after Thanksgiving and began their holiday shopping online using their employer’s internet connection. Nowadays, it is a great opportunity for retailers to generate nearly $1.2 billion in sales nationwide.

However, from a state perspective Cyber Monday is a lost opportunity to collect funds necessary to provide vital services. When consumers purchase goods from brick and mortar stores in Maryland the retailers collect the sales tax and remit it to the state. Yet when a Maryland resident makes an online purchase, the resident is responsible for remitting the tax to the state, which few do. Remitting the tax on these purchases falls to the consumer because online retailers without a physical presence in Maryland are not required to collect the tax. According to some estimates, this cost Maryland upwards of $164 million in lost tax revenues.

While federal action would be required to allow Maryland to collect all $164 million, in a June 2011 report Neil Bergsman highlighted two things Maryland can do to increase the tax collection rate for online purchases:

• Change the law to require online retailers with Maryland affiliates to collect state sales tax. This should apply whether the affiliate is an individual or a subsidiary company.
• Add a line to its state income tax form to help consumers remit their use tax once a year, as the vast majority of states have done

In the upcoming legislative session, Governor O’Malley and the General Assembly will have to figure out how to plug a roughly $1 billion shortfall in the FY 2012 budget. Given the significant cuts made to services over the past several budgets, and the loss of federal stimulus dollars, MBTPI encourages a balanced approach to closing the budget gap that includes revenue enhancements such as collecting online sales taxes.

Thanksgiving dinner is not a sure thing for 1 in 8 MD households

Thanksgiving is right around the corner, and for many of us that means looking forward to a big dinner with family. Yet for 1 in 8 Maryland households Thanksgiving is just another day spent struggling to put food on the table.

Between 2008 and 2010 an average of 12.5 percent of all households in the state were food insecure, meaning they struggled to pay for enough quality food for every member of the household at some point during the year. Of those 276,250 households, almost 41 percent had “very low” food security, meaning that they had to skip meals or otherwise significantly reduce their food intake at some point during the year due to a lack of resources.

Unsurprisingly, the Great Recession has had an outsize effect on hunger in Maryland. The share of households that were food insecure averaged 8.6 percent in the three years prior to the recession, essentially unchanged from the 8.7 percent average between 1996 and 1998. Since the beginning of the recession and after its official end in June 2009, the average share of households who were food insecure jumped roughly 45 percent.

Funding is threatened for state and federal programs that fight hunger every day. These include the Supplemental Nutrition Assistance Program (SNAP, formerly “Food Stamps”), the Women, Infants and Children (WIC) program, school lunch and breakfast programs, and senior nutrition programs like congregate meals. As the state economy fails to recover, the demand on these programs continues to grow. Here is our earlier report on the exploding number of SNAP recipients.

The increasing number of hungry Marylanders is a sobering reminder that the governor and General Assembly need to take a balanced approach to balancing the FY2013 budget. Further cuts to services will have real consequences for struggling families. The state should make strategic use of new revenue streams to maintain the strength of Maryland families.

Name the Blog!

We are looking for your input on the name of this blog. 

When we started it, I decided to call it “Maryland Budget Items.” I thought this was a particularly clever choice, because “items” refers to news items as well as line items in a budget. 

I've heard from some people, however, who do not love this name like I do.

Okay, I can take it. And maybe we can do better? So...

I’m asking you to suggest a new name. In fact, we’re holding a contest! The winner will get not only satisfaction, but a few freebies... a good thing in this economy! 

Of course, you might vote to keep the blog title the same... if “Maryland Budget Items” wins, we'll draw one of your names out of a hat. Either way, the winner* gets lunch with me at a trendy spot in Federal Hill or beautiful Annapolis, and a keepsake mug (*unless you’re a state elected official; then we can’t give you anything because of the ethics laws, and the prize will go to the runner-up).

We’ll accept your nominations through December 9, and then we’ll send you instructions on how to vote. To suggest a name, simply comment to this blog post (or email me if you're shy).

Thank you!

The Time is Right to Reinstate the Millionaires' Tax

Maryland is now leading the nation in number of millionaires. (See the AP story printed in the Baltimore Sun, and more coverage about our state's standing and the millionaires' tax in the Gazette of Business and Politics.) A rate change back to prior levels is needed, it would produce substantial revenue, and it shouldn't be feared.

Having assets greater than one million isn’t the same as having an income that exceeds one million, and therefore, the pool of “millionaires” to be taxed at a higher rate would be much smaller. Still, we are a wealthy state, and we have many residents capable of contributing more fairly.

Will we drive them out by a small increase in their tax obligation? Not if past experience is a guide, as the Center for Budget and Policy Priorities has detailed in a recently released study, and as was found in New Jersey after it implemented a millionaires' tax

If we reimpose a millionaires' tax, we can expect to reap about $87 million dollars each year.

Last year, MBTPI wrote a policy paper about this issue, and the points made then remain valid today.

This is the right time to get our state's wealthiest to help pay for the quality of life, education, and other benefits that are at risk if we resort to more cuts rather than reasonable revenue raising.

New momentum for new revenues

The state legislature’s recent Special Session was punctuated by talk about how to grow our economy, help create jobs, and meet the needs of Marylanders. This is not an easy task, but it is possible if we take  a balanced approach that includes revenues instead of a cuts-only approach that puts our economy in jeopardy.  If we want to attract and create new jobs, we need to invest in our schools, repair our roads and bridges, and keep our communities safe, and we can only do this with new revenue.

Recently, I’ve been encouraged by a handful of articles that show some momentum in the fight for a balanced approach that includes new revenue.   I  want to share a few with you today:

•         The MarylandReporter discusses a number of sources of revenue:

•         The Gazette forecasts an ongoing focus on revenue in the state legislature 

We have also seen lots of attention on the growing income disparity in our country.   As more people speak out on this issue, we have a unique opportunity to look at how our tax system has favored the wealthy in recent decades and how we can help protect middle- and low-income families who are struggling amid the weak economy.  A balanced approach to our country’s finances, including new revenues rather than a cuts-only strategy, is the best way to help lift our economy and improve the lives of average Americans.     

Here are a few news items that highlight these issues:

•          A piece about top earners more than doublingtheir share of American income.
•          A graphic showing income distribution over thelast thirty years.
•         An article with split opinions from millionaires about a potential surtax.