Thursday, October 25, 2007

Allan Lichtman and the Special Session

First, I admire and respect Allan Lichtman. I took his research seminar as a graduate student at American University and assisted his writing class for freshman history majors. Professor Lichtman is fine scholar and a good teacher. If you want to learn how to write and write well, take any course he teaches.

I highly recommend his book The Keys to the White House. The book is an analytical forecasting system that has successfully predicted the winner of the popular vote in presidential elections. He predicted Bush’s win in 2004, and not only that his keys system works for every presidential election since 1860.

Having said that, professor Lichtman and I are as far apart politically as the Yankees fans and Red Sox fans are on baseball. He is as Ron Smith calls him an über-liberal or progressive, and I am …well if I have to tell you about me, stop reading now.
I took umbrage with a few points Lichtman made in his Montgomery Gazette column about the upcoming special session. Lichtman writes:

Just as medical authorities tell us that shedding pounds requires only a four-word prescription — eat less, exercise more — the same holds true for shedding deficits — spend less, tax more. And don’t for a moment think that legalizing slots doesn’t count as taxation. We know that slot machine gambling is one of the most regressive ways to extract revenue from our residents. That’s why Sean Dobson, the head of Progressive Maryland, says that his group — the state’s conscience on progressive taxation — firmly opposes legalized slot machine gambling in our state.

Spend less (good idea). Tax more? How does taxing more lead to shedding a deficit? Oh sure technically you would balance the budget or maybe even get a surplus. However, that would require a governor and legislators who don’t spend our money like an heiress out for a day on Rodeo Drive. In the reality that is the Maryland General Assembly, spend less, tax more ends up becoming tax more; spend even more than that.

I would hardly call Progressive Maryland the “state’s conscience on progressive taxation.” How much conscience does an organization really have when they resort to pulling stunts like their childish push poll to foist the fallacy that Marylanders actually want more and higher taxes?

More Lichtman on progressive taxation:
Governor O’Malley is on track by relying on progressive forms of taxation to generate more revenue for the state. The General Assembly needs to resist the pressure of lobbyists who will be swarming around Annapolis and close our state’s egregious tax loopholes for big corporations. It should mostly increase the corporate tax rate and make sure that any sales tax increase covers such services as property management and health clubs used primarily by the affluent.


A real study of O’Malley’s tax plan by Ernst & Young details the economic impact of increasing the corporate tax and adopting combined reporting. Both would cost 36 jobs for every $10 million in revenue. 17.5 jobs lost for every $10 million in revenue from the corporate tax increase, 18.3 jobs lost for every $10 million in revenue from combined reporting.

The EY report also shows similarly drastic job losses due to the sales tax increase:
• The static sales tax changes would decrease Maryland employment, including government jobs, by -8,334 jobs in 2012; job losses will increase to -9,274 by 2017.

• The largest job reductions in 2012 are in wholesale and retail trade (-2,341), and accommodation and food services (-1,238).

• Comparing the decrease in jobs to the amount of the static increase in state sales taxes from the rate increase, the tax rate increase will result in 9.5 jobs lost per $1 million of tax increases in 2012.

• The decreases in employment also reduce the personal income received by Maryland residents by $461 million in 2012 and $655 million in 2017.

• In addition to reductions in jobs and incomes, the sales tax increases are projected to decrease real investment in business machinery, equipment, structures and other capital assets. The reduction reaches $152 million by 2017.

• Section II of Table 2.2 shows that Maryland’s weaker economy will reduce state tax collections by an estimated $45 million in 2017. This will partially offset the static revenue increase in sales taxes shown in Table 2.1. In addition, local governments’ taxes will be reduced by $33 million in 2017.

The sectors of the economy that will lose the most jobs will be wholesale and retail trade, and Accommodation and food services a net loss of 3,647 jobs in these sectors alone. Jobs usually occupied by the people progressives claim to champion.

Tax more, lose jobs. How progressive!

The General Assembly should endorse the governor’s plan to make the state income tax more progressive by raising the rates for high-income earners. The amount paid by those within the upper tax brackets will be only a fraction of the tax windfalls they have already reaped from federal tax cuts that President Bush pushed through Congress during this last term.


If you ever wanted to see the philosophical differences between conservatives and progressives in its starkest form that was it. A windfall? A tax cut is not a windfall. It is government allowing its citizens to keep the money they earned. As Rick Moran noted "That money is the taxpayer’s. It is already in his pocket. A tax cut is nothing more than a law preventing the government from reaching into the taxpayer’s pocket and taking away his property… In short, the money “given back” to taxpayers is really the government’s money to begin with, theirs to do with as they see fit."

Only a progressive could see the government keeping its hands out of its citizens' pockets as a “windfall”.

crossposted on The Main Adversary

2 comments:

The Patriot Sharpshooter said...

I have a friend in Annapolis who sends me editorial links from their paper. More & more liberals are voicing discontent over failed social programs.
Since the General Assembly and Governor obviously don't understand basic economics, you gotta wonder if Maryland and other major urban areas are doomed to soon fail?
How long will those of us who earn a wage keep handing over our money until mid-May every year? Or should we just send all our money to them, letting our "commrade politicians" decide how much we deserve?

andrew.langer said...

This is good stuff. Matt Weinstein from Progressive Maryland came out to Queen Anne's County last night to do ProgMD's song and dance routine - the chicanery was not only painfully apparent, many people in the audience found it insulting of their intelligence.

I'm probably going to do a review on my own blog, but to give you the bare bones - we saw through the inartfully done push-polling (you may have seen today's numbers, demonstrating that O'Malley's approval numbers have sharply dipped since he started his smash-and-tax talk, as have the "right direction/wrong direction" numbers).

He offered up his own numbers regarding Maryland's rankings, and proceeded to misrepresent Forbes' reportings on Maryland's "economic freedom". He claimed, for some reason, that Forbes ranked MD 12 nationally in economic freedom.

Having hosted an event for the study's authors at my offices, I knew this wasn't the case. Maryland ranks 27th overall, 37th in fiscal responsibility, 4th in government size, 26th in the ability to minimize regulatory costs, etc.

He dismissed the Laffer Curve, misrepresented its history, and categorically denied that lower taxes raises revenue. He refused to accept that following Reagan's tax cuts that revenue to the federal government doubled from 1982 to 1989, and revenue from personal income taxes was raised considerably.

Perhaps most insulting was his summation, which discussed the Preamble to the Constitution, using it as the starting point for justifying all manner of expansive government, without failing to mention that the articles, sections, and first 10 Amendments all then lay out with specificity the limits on the very government powers he seeks to see expanded.

More to come on my blog...

http://langrrr.blogspot.com

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