Maryland

Misleading In Maryland

Joe Mathews — Wed, 03 Sep 2008 12:45:00 -0400

The ballot title of a referendum legalizing slot machines in Maryland suggests slots would be authorized only to fund education. In fact, slightly less than half of the money would go to education, the League of Women Voters reports. Such misleading titles are common in referenda that are placed on the ballot by legislatures, since they can draft the titles themselves. In citizen initiatives, someone independent of the authors -- typically an attorney general or secretary of state -- writes the title.

Repealing Tax Changes Before They Take Effect -- Is There a Better Way?

Annette Nellen — Tue, 22 Apr 2008 14:09:00 -0400

In the past year, we have seen both Michigan and Maryland enact new taxes, only to repeal them soon thereafter and before they became effective, due to complaints. That's a lot of work for no effect. What could have been done differently?

On 12/1/07, the day a use tax on specified services was to go into effect, Michigan repealed the law (see prior blog post). More recently, Maryland repealed its expansion of the sales tax to computer services. In November 2007, the legislature added computer services to a measure designed to address a budget shortfall (see Washington Post article of 12/9/07). The tax was to become effective on July 1, 2008. Fierce opposition by the business community led to its repeal in April 2008. The tax would have mostly applied to businesses since they purchase more computer services than do individual consumers.

Back in 1987, we saw Florida expand its sales tax to include specified services, only to repeal that tax 6 months later. In 1990, Massachusetts expanded its sales tax to services, but repealed it before the effective date.

This seems like a lot of wasted effort. In Maryland, the Comptroller's Office was struggling to write regulations to help businesses be ready to comply - a project now pulled.

What night have helped lead to more productive legislative efforts and more lasting tax changes? Here are a few suggestions:

Transition: In creating a new tax or expanding an existing tax to include new taxpayers, provide sufficient time for the tax agency to provide guidance and assistance and for taxpayers to get their computer and business systems ready to handle any new collection, reporting and payment procedures. In Michigan, the expanded sales tax was enacted in October to be effective on December 1. That's not enough time for businesses to get ready to collect the tax.
Use Prior Research: Many states have had commissions to study tax reform in their states. Typically, there are hearings and months of thought and discussion. Commission final reports tend to sit on shelves. Legislators should look for such reports to see what was suggestion as typically a lot of thought and research goes into these reports. NCSL keeps a list.
Avoid Sales Tax Pyramiding: Plans to expand sales tax to more types of services should stay away from services that are primarily purchased by businesses. This will avoid pyramiding in the sales tax.
Accompany Any Base Expansion with a Rate Reduction: If a tax base is to be expanded, the rate should be lowered. Typically, a tax with a broader base and lower rate is simpler (fewer rules needed to define what is not taxed or is treated specially), can have higher compliance rates (less interest in tax planning due to lower rate), and is more neutral (fewer special rules causing the tax law to influence decisions). Base expansion accompanied with a rate reduction is more likely to be accepted as tax system improvement by taxpayers than just a base expansion.
Educate Taxpayers: Use advertising to help taxpayers understand the current flaws in the tax system and why they need to be fixed.
Fix Tax Systems in Good Times: Tax law changes made during times of budget crisis are likely to be focused more on what raises the requisite revenue rather than what makes best sense for modernizing a tax system within the principles of good tax policy.

THURSDAY ROUND-UP: San Francisco Anglophilia, a Student Mistake, and Wolves!

Joe Mathews — Thu, 13 Mar 2008 13:57:00 -0400

QUESTION TIME: Last year, San Francisco voted down a ballot initiative that would have required the mayor to submit to "question time" from the board of supervisors, in the same manner that British prime ministers must take questions in the House of Commons. But the board of supes hasn't given up, inviting Mayor Gavin Newsom to show up and take questions. He is declining these invitations. Newsom, who remains popular despite a public confession of adultery with a top aide's wife, has been deflecting requests for information of all kinds as he explores a race for governor in 2010. (Arnold is termed out, so the seat is open).

ROOKIE MISTAKE: California college students, angry about tuition hikes, have filed an initiative called for a five-year tuition freeze starting in 2009. But don't bet on the measure making the ballot. The group of students behind the measure has announced it is going to use volunteers to gather signatures. What they'll discover is that it is far more costly and time-consuming -- and less effective -- to field teams of volunteers than it is to simply hire paid signature gatherers. The students would find it cheaper -- and would be more likely to gather signatures -- if they devoted themselves to raising money for a paid campaign. Here's a story on the volunteer effort.

SHOOTING WOLVES IN THE LAST FRONTIER: In the northern reaches of our country, wolves have been the target of ballot initiative campaigns, often feeling the same vitriol reserved for immigrants and child molesters in other parts of the country. Alaska is now debating a ballot initiative that would prohibit "aerial wolf control" -- that is, state biologists shooting wolves from the air, a common practice for controlling -- them, except in a "biological emergency." For critics, the thinning of the caribou herd (blamed on wolves attacking caribou calves) constitutes an emergency. Also in Alaska, a public financing plan for state elections makes the ballot. The text of the measure is here. MARYLAND SLOTS: The referendum to raise taxes and permit slot machines survives a Republican court challenge and heads to the November ballot.

IS THIS VOTE NECESSARY? Citizens in a Colorado town that has only 800 voters want to put a referendum on a development question. My question: With so few voters, wouldn't it be simpler, cheaper and more productive to hold a meeting?

MORE CALIFORNIA LOCAL DEVELOPMENT BATTLES: This is an issue we're tracking close: the growing use of municipal and county ballots to decide land use questions that city governments are paid to solve. Here's an initiative to limit developers in San Marcos (in the San Diego area). In Redwood City (in northern California), environmental groups are seeking to qualify an initiative requiring two-thirds voter approval of any future development of city open space. And in Thousand Oaks, where there's already a big June ballot battle between a local hardware store chain and Home Depot, mobile home residents have submitted an initiative that would give them a chance to buy the land under their homes.