Everyone was waiting for Governor O'Malley's gas tax proposal - conspicuously absent from his recent budget submission - but few could have anticipated that O'Malley would propose adding a 6% sales tax to gasoline and effectively add $0.21 per gallon over the next three years.
This is, of course, a ludicrous proposal. No member of the General Assembly elected by a victory margin of less than 10 percentage points would even consider such an increase - especially when coupled with the other tax increases proposed by O'Malley.
But O'Malley has no expectation of a $0.21 per gallon tax increase - rather O'Malley has decided to give the General Assembly political cover and make whatever gas tax increase they ultimately pass seem like a bargain for state residents.
Most folks were anticipating a proposed increase of $0.15, in line a state commission’s recent recommendation. Senate President Mike Miller has argued a $0.10 tax increase was more reasonable. More reasonable compared to $0.15? Maybe. But compared to $0.21? Absolutely.
So do not be fooled. Governor O'Malley does not expect the Assembly to increase the gas tax by $0.21 per gallon. Rather he thinks the $0.21 per gallon proposal will make residents thankful when the Assembly approves an increase of "only" $0.10 or $0.15. Wait and see how long it takes for members of the Assembly to step forward and "challenge" their governor by expressing firm opposition to the proposal... and then support for a "much lower" or "more reasonable" increase.
It's a cynical ploy, but one that will likely work. Unfortunately, it will be another regressive tax passed on to working families and another hit to the recovering economy. Between gas taxes, flush taxes, and higher tolls it becomes harder and harder to see how working class families will be able to recover from the Great Recession (remember when Democrats represented working families?). It also becomes harder to see any indication that O'Malley cares... his attention seems to have shifted to 2016 and the Democratic presidential primary.
O'Malley's 2012 agenda for the state must be giving Lt. Governor Anthony Brown serious heartburn - as he'll be the one asked to defend the record should he seek the Democratic nomination for governor in 2014.
O'Malley may help Republicans accomplish something that they have been unable to do on their own - become competitive with Democrats statewide. Major elements of O'Malley's agenda are opposed by majorities in the state and his positive approval rating is driven entirely by voters in Baltimore City and Prince Georges County according to a recent Post poll. Though Democrats continue to maintain a clear voter registration advantage over Republicans the annual voter registration report from the State Board of Elections shows the Democratic and Republican voter rolls shrank while unaffiliated registration grew - but in Maryland, most unaffiliated voters vote Republican. Likewise, though Democrats dominated statewide and federal elections in 2010, Republicans won 50% of all local offices for the first time since... the Civil War.
Two party competition is slowly coming to Maryland, O'Malley seems to have committed himself to hastening its arrival.
Showing posts with label gas tax. Show all posts
Showing posts with label gas tax. Show all posts
Monday, January 30, 2012
Monday, January 23, 2012
O'Malley's Budget Would Jeopardize Economic Recovery
Now is not the time to introduce significant and regressive tax increases on working families, nor is it the time to lose ground on education equality by shifting costs to economically unequal counties.
Last week Governor O'Malley unveiled his FY 2013 budget. As with all prior years, O'Malley had to deal with a structural deficit - this time amounting to roughly $1 billion of the budget's $14 billion total. With the exception of a 2007 special session O'Malley has opted to bring the budget into balance every year through spending cuts and one-time transfers from special funds. Even in the 2007 special session of the Maryland General Assembly the $800 million in new revenue generated by taxes on businesses and individuals were were coupled with $500 million in spending reductions. All told, O'Malley has cut spending by $7.5 billion during his tenure - a commendable accomplishment during very lean times.
For FY 2013, O'Malley continues to make cuts - roughly $600-800 million depending on the math - but decided as well that the time was right for more tax increases, what O'Malley describes as a balanced approach. I do not disagree with the need to consider additional sources of revenue, unfortunately O'Malley's concept of "balance" is anything but balanced. O'Malley proposes capping deductions for singles making more than $100,000 and couples making more than $150,000. Estimates are this would impact the top 20% of wage earners in the state - so this tax increase is not targeted at the top 1%, 5% or 10% - it hits deeply into the middle class in a very high cost of living state.
The capping of tax deductions is not the worst offender, however. Though the income tax provisions would work to make Maryland's income tax structure more progressive (a good thing) it is offset by several proposals that would be especially harmful.
O'Malley has proposed an end to a decades old practice of the state covering the cost of teachers' pensions by beginning a steady shift of that responsibility to the counties. Under the proposed budget $239 million in teachers' retirement costs would be shifted to cash-strapped counties. The governor's budget offsets some of the cost transfer by having the state assume responsibility for some of the teachers' Social Security payroll tax (formerly handled by the counties) and via revenue sharing from the new tax policies. But even with these measures the cost shift to counties is tremendous. Maryland is home to significant income inequality across and between counties and this cost shift will be especially burdensome on poor counties - counties where quality teachers are already hard enough to attract. Consider the stark contrast between Allegany County with a median household income of roughly $39,000 and Howard County where the median household income is $104,000. Yes, wealthier counties would now see an increased income tax burdone, but the increase would hardly offset the increased pension costs shouldered by poorer counties - instead, residents of poor counties will see increases in their local taxes.
Not in the budget, but expected to follow soon, is a proposal from O'Malley to increase the gas tax by $0.15 a gallon - bringing the state tax to nearly $0.40 per gallon. O'Malley argues this is a reasonable increase given the infrastructure needs of the state and the fact that the gas tax has not been increased in years. It's true the state is in need of infrastructure improvements - making one question the governor's decisions to repeatedly raid the transportation trust fund for other purposes in the past - but an increase in the gas tax during a weak economic recovery is just a bad idea. Adding that gas tax increase on top of recent and dramatic increases in Maryland tolls makes it an unforgivable idea.
Excise taxes (like those placed on fuel) and tolls are especially regressive as they consume far more of the income of lower income earners. O'Malley is essentially raising the cost of working for Maryland families. He is also raising the cost of providing for those families. The higher fuel and toll costs will deplete the disposable income of working families - that means less money to save for college, for retirement, and less money to spend on goods and services that help maintain economic growth. Higher fuel and toll costs will also increase the prices of goods and services meaning that Maryland's working families will have less to spend on more expensive goods and services - a double whammy that makes no sense in the midst of a weak economy.
As if the increased fuel and toll costs were not enough, the Governor would also double the current $30 flush tax on most families. O'Malley proposes that the flush tax now be based on water usage, rather than a flat tax - but this only works for folks with public water (like Howard County). For folks living in rural Maryland (like Allegany County) who draw water from a well the tax would simply be doubled. The net effect likely to be a disproportionate cost shift to lower income Marylanders. According to the Congressional Budget Office, the bottom 20% of wage earners pay three times more of their income on federal excise taxes on gasoline and motor fuel alone as compared to the top 20%. When all federal excise taxes are considered, the proportional burden placed on the bottom 20% rises to nearly six times that of the top 20%. Six times the burden for federal excise taxes alone - and O'Malley would add to the inequality through increases in state excise taxes. So much for progressive leadership.
In introducing the budget O'Malley declared "Job creation is our No. 1 priority..." Such a statement can hardly be reconciled with a budget that seeks balance by placing significant new costs on working class Marylanders by increasing the cost of driving to work, the costs of goods and services purchased, and even the cost of the water they drink.
In a state that tops the country in millionaires, O'Malley is relying on regressive taxation and a tremendous cost shift to counties to balance the budget. The approach is anything but balanced or fair and should be rejected by the General Assembly.
Last week Governor O'Malley unveiled his FY 2013 budget. As with all prior years, O'Malley had to deal with a structural deficit - this time amounting to roughly $1 billion of the budget's $14 billion total. With the exception of a 2007 special session O'Malley has opted to bring the budget into balance every year through spending cuts and one-time transfers from special funds. Even in the 2007 special session of the Maryland General Assembly the $800 million in new revenue generated by taxes on businesses and individuals were were coupled with $500 million in spending reductions. All told, O'Malley has cut spending by $7.5 billion during his tenure - a commendable accomplishment during very lean times.
For FY 2013, O'Malley continues to make cuts - roughly $600-800 million depending on the math - but decided as well that the time was right for more tax increases, what O'Malley describes as a balanced approach. I do not disagree with the need to consider additional sources of revenue, unfortunately O'Malley's concept of "balance" is anything but balanced. O'Malley proposes capping deductions for singles making more than $100,000 and couples making more than $150,000. Estimates are this would impact the top 20% of wage earners in the state - so this tax increase is not targeted at the top 1%, 5% or 10% - it hits deeply into the middle class in a very high cost of living state.
The capping of tax deductions is not the worst offender, however. Though the income tax provisions would work to make Maryland's income tax structure more progressive (a good thing) it is offset by several proposals that would be especially harmful.
O'Malley has proposed an end to a decades old practice of the state covering the cost of teachers' pensions by beginning a steady shift of that responsibility to the counties. Under the proposed budget $239 million in teachers' retirement costs would be shifted to cash-strapped counties. The governor's budget offsets some of the cost transfer by having the state assume responsibility for some of the teachers' Social Security payroll tax (formerly handled by the counties) and via revenue sharing from the new tax policies. But even with these measures the cost shift to counties is tremendous. Maryland is home to significant income inequality across and between counties and this cost shift will be especially burdensome on poor counties - counties where quality teachers are already hard enough to attract. Consider the stark contrast between Allegany County with a median household income of roughly $39,000 and Howard County where the median household income is $104,000. Yes, wealthier counties would now see an increased income tax burdone, but the increase would hardly offset the increased pension costs shouldered by poorer counties - instead, residents of poor counties will see increases in their local taxes.
Not in the budget, but expected to follow soon, is a proposal from O'Malley to increase the gas tax by $0.15 a gallon - bringing the state tax to nearly $0.40 per gallon. O'Malley argues this is a reasonable increase given the infrastructure needs of the state and the fact that the gas tax has not been increased in years. It's true the state is in need of infrastructure improvements - making one question the governor's decisions to repeatedly raid the transportation trust fund for other purposes in the past - but an increase in the gas tax during a weak economic recovery is just a bad idea. Adding that gas tax increase on top of recent and dramatic increases in Maryland tolls makes it an unforgivable idea.
Excise taxes (like those placed on fuel) and tolls are especially regressive as they consume far more of the income of lower income earners. O'Malley is essentially raising the cost of working for Maryland families. He is also raising the cost of providing for those families. The higher fuel and toll costs will deplete the disposable income of working families - that means less money to save for college, for retirement, and less money to spend on goods and services that help maintain economic growth. Higher fuel and toll costs will also increase the prices of goods and services meaning that Maryland's working families will have less to spend on more expensive goods and services - a double whammy that makes no sense in the midst of a weak economy.
As if the increased fuel and toll costs were not enough, the Governor would also double the current $30 flush tax on most families. O'Malley proposes that the flush tax now be based on water usage, rather than a flat tax - but this only works for folks with public water (like Howard County). For folks living in rural Maryland (like Allegany County) who draw water from a well the tax would simply be doubled. The net effect likely to be a disproportionate cost shift to lower income Marylanders. According to the Congressional Budget Office, the bottom 20% of wage earners pay three times more of their income on federal excise taxes on gasoline and motor fuel alone as compared to the top 20%. When all federal excise taxes are considered, the proportional burden placed on the bottom 20% rises to nearly six times that of the top 20%. Six times the burden for federal excise taxes alone - and O'Malley would add to the inequality through increases in state excise taxes. So much for progressive leadership.
In introducing the budget O'Malley declared "Job creation is our No. 1 priority..." Such a statement can hardly be reconciled with a budget that seeks balance by placing significant new costs on working class Marylanders by increasing the cost of driving to work, the costs of goods and services purchased, and even the cost of the water they drink.
In a state that tops the country in millionaires, O'Malley is relying on regressive taxation and a tremendous cost shift to counties to balance the budget. The approach is anything but balanced or fair and should be rejected by the General Assembly.
Friday, November 11, 2011
Occupy Maryland: Where Millionaires Play and the Working Class Pay
Congratulations Maryland! According to a story in today's Washington Post, the Free State leads the country in Millionaires. Approximately 7.22% of Marylander households are part of the exclusive millionaires club.
There are about 2.4 million households in Maryland so that translates into roughly 173,000 millionaire households. I'm glad this information was released, because the state is currently considering, and Governor O'Malley appears to be supporting, a series of proposals to increase any number of taxes - the gas tax, the flush tax, car titling and registration fees, and the auto emissions testing fee. Indeed, the one tax that O'Malley does not seem interested in increasing is the income tax.
A few months ago, O'Malley accused the GOP of "worshipping" tax cuts for the wealthy. That may be, but it's clear here in Maryland that O'Malley is happy to bow down before the alter of tax increases on the poor and working class.
Now the data on millionaires is specific to families with at least $1 million in liquid assets, but let's consider questions of income in Maryland - afterall, the higher your income, the more likely you are to accrue $1 million in liquid assets. The median household income in Maryland is $69,000 a year. Under Maryland's tax schedule, the median household would face an effective tax rate on 4.67%. A household earning between $500,000 and $1 million would face an effective tax rate of 5.2%, earn over $1 million and your effective tax rate slowly approaches a maximum of 6.25%.
Nationally, the median income is $50,000 a year. Under the current federal marginal tax rates, the median household would face a tax burden of $6,650 - an effective tax rate of 13.3%. A household earning $1 million dollars would pay $290,000 for an effective tax rate of 29%.
In Maryland, the effective tax rate imposed upon a millionaire is roughly 11% greater than the effective rate charged the median household. Nationally, the effective tax rate assessed on a millionaire is 118% greater than the rate assessed on the median household.
Compared to Maryland's current marginal income tax rates, the current federal rates (signed into law by George W. Bush) are far more progressive.
So before the state considers placing an even greater tax burden on poor and working class Marylanders, lawmakers may want to consider making the state's income tax more progressive. Perhaps the burden of supporting the state should rest more heavily on those who can best afford to support it and who best benefit from the services and stability the state provides.
As pointed out in a prior post, according to the Congressional Budget Office, the bottom 20% of wage earners pay nearly 1% of their income on excise taxes on gasoline and motor fuel alone. By contrast, the top 20% pay only 0.3% of their income on such taxes. When all federal excise taxes are considered, the proportional burden placed on the bottom 20% rises to nearly 2.8%, while the burden placed on the top 20% is only 0.5%. A 3% burden compared to a 0.5% burden... that's the very definition of a regressive tax folks.
And lest we forget, Maryland's sales tax was already increased by 20% under O'Malley's watch and an analysis conducted by the Maryland Budget and Tax Policy Institute determined "Increasing the sales tax rate has a seven times greater impact on the lowest income families compared to the highest income families." Further with regard to state and local taxes the poorest 20 percent of Maryland families paid nearly twice as much, as a percentage of their income, in taxes as did the very richest Maryland families.
No wonder Maryland tops the nation in millionaires, what millionaire wouldn't want to live in a state with a nearly flat income tax and an increasingly regressive tax burden shifted to the poor? Who wouldn't want to tow their yacht to the Bay on roads and bridges disproportionately funded by the excise taxes and fees imposed on commuters, construction workers, single parents shuttling between school drop-offs and two part time jobs, or the unemployed driving to job interviews?
Perhaps the thinking is millionaires can pack up and move if their taxes are increased, but the poor are stuck here and will have no choice but too stay and pay? That's certainly not progressive thinking. Perhaps it's time to occupy Annapolis?
There are about 2.4 million households in Maryland so that translates into roughly 173,000 millionaire households. I'm glad this information was released, because the state is currently considering, and Governor O'Malley appears to be supporting, a series of proposals to increase any number of taxes - the gas tax, the flush tax, car titling and registration fees, and the auto emissions testing fee. Indeed, the one tax that O'Malley does not seem interested in increasing is the income tax.
A few months ago, O'Malley accused the GOP of "worshipping" tax cuts for the wealthy. That may be, but it's clear here in Maryland that O'Malley is happy to bow down before the alter of tax increases on the poor and working class.
Now the data on millionaires is specific to families with at least $1 million in liquid assets, but let's consider questions of income in Maryland - afterall, the higher your income, the more likely you are to accrue $1 million in liquid assets. The median household income in Maryland is $69,000 a year. Under Maryland's tax schedule, the median household would face an effective tax rate on 4.67%. A household earning between $500,000 and $1 million would face an effective tax rate of 5.2%, earn over $1 million and your effective tax rate slowly approaches a maximum of 6.25%.
Nationally, the median income is $50,000 a year. Under the current federal marginal tax rates, the median household would face a tax burden of $6,650 - an effective tax rate of 13.3%. A household earning $1 million dollars would pay $290,000 for an effective tax rate of 29%.
In Maryland, the effective tax rate imposed upon a millionaire is roughly 11% greater than the effective rate charged the median household. Nationally, the effective tax rate assessed on a millionaire is 118% greater than the rate assessed on the median household.
Compared to Maryland's current marginal income tax rates, the current federal rates (signed into law by George W. Bush) are far more progressive.
So before the state considers placing an even greater tax burden on poor and working class Marylanders, lawmakers may want to consider making the state's income tax more progressive. Perhaps the burden of supporting the state should rest more heavily on those who can best afford to support it and who best benefit from the services and stability the state provides.
As pointed out in a prior post, according to the Congressional Budget Office, the bottom 20% of wage earners pay nearly 1% of their income on excise taxes on gasoline and motor fuel alone. By contrast, the top 20% pay only 0.3% of their income on such taxes. When all federal excise taxes are considered, the proportional burden placed on the bottom 20% rises to nearly 2.8%, while the burden placed on the top 20% is only 0.5%. A 3% burden compared to a 0.5% burden... that's the very definition of a regressive tax folks.
And lest we forget, Maryland's sales tax was already increased by 20% under O'Malley's watch and an analysis conducted by the Maryland Budget and Tax Policy Institute determined "Increasing the sales tax rate has a seven times greater impact on the lowest income families compared to the highest income families." Further with regard to state and local taxes the poorest 20 percent of Maryland families paid nearly twice as much, as a percentage of their income, in taxes as did the very richest Maryland families.
No wonder Maryland tops the nation in millionaires, what millionaire wouldn't want to live in a state with a nearly flat income tax and an increasingly regressive tax burden shifted to the poor? Who wouldn't want to tow their yacht to the Bay on roads and bridges disproportionately funded by the excise taxes and fees imposed on commuters, construction workers, single parents shuttling between school drop-offs and two part time jobs, or the unemployed driving to job interviews?
Perhaps the thinking is millionaires can pack up and move if their taxes are increased, but the poor are stuck here and will have no choice but too stay and pay? That's certainly not progressive thinking. Perhaps it's time to occupy Annapolis?
Thursday, October 27, 2011
Peter Franchot, the Progressive Conservative
I continue to be impressed with Comptroller Peter Franchot and his maneuvering toward the 2014 gubernatorial contest. With the redistricting "battle" behind us and the special legislative session of the General Assembly adjourned, all attention has shifted to the upcoming regular session and the question of tax increases. A panel convened by Governor O’Malley and tasked with identifying new revenue streams to pay for transportation infrastructure improvements has endorsed a $0.15 a gallon increase in the state's gas tax, they also endorsed significant increases in automobile titling and registration fees and a doubling of the vehicle emissions inspection fee. Not to be outdone, A state task force is considering doubling and then tripling the state's so-called "flush tax" from its current $30 per year to $90 by 2015.
In response to these proposals, Franchot has called for a two year freeze on all new taxes and fees to “give businesses and consumers time to catch their breath.”
A few months ago, Franchot made headlines arguning Maryland needed to be less reliant on the federal sector for job creation. I argued at the time that it was a smart move and showed Franchot was trying to position himself as the conservative option in a Democratic gubernatorial primary that is likely to feature two well-known, and progressive, Democrats - Attorney General Doug Gansler and Lt. Gov. Anthony Brown.
Democrats' routinely win about 60% of the statewide vote so winning the Democratic primary is a doorway to the governorship. Gansler is an unabashed liberal and Brown, the state's first African-American Lt. Governor and an accomplished legislator with an impressive resume, will undoubtedly lay an early claim to the significant African-American vote. So Gansler and Brown will split two of the most reliable segments of the Democratic primary voting population - liberals and African-Americans.
This creates an opening for a moderate to conservative Democrat to lay claim to white, moderate and conservative Democrats, of whom there are many in Maryland.
But the situation is even better for Franchot. The three Democratic power centers in Maryland are Baltimore City, Montgomery county, and Prince Georges county. Democrats routinely lose most of the other counties in the state, but win those population centers. In a primary contest, a candidate who could claim those regions would be unbeatable - but if they are divided then the state's remaining, and far more conservative counties, become crucial. Brown hails from Prince Georges county and if he is able to consolidate the African-American vote then he is likely to claim Prince Georges county and Baltimore City - much as Kweisi Mfume did in the 2006 Senate primary against Ben Cardin. Cardin bested Mfume by winning Montgomery county, Baltimore county and Anne Arundel county by nearly 2-to-1 margins.
Gansler and Franchot are from Montgomery county and both have held elective office there. They would likely split the county's vote. If one were to return to the 2006 Senate primary, a cursory review of election results would seem to suggest that Gansler and Franchot splitting the vote outside of Baltimore City and Prince Georges county would benefit Brown. But the 2006 Senate primary was missing something, something Franchot is looking to bring to the 2014 gubernatorial contest - a moderate/conservative option for Democratic primary voters. In 2006, Democratic turnout in more conservative counties (Allegheny, Carroll, Frederick, Washington) was below overall turnout. If Franchot offers moderate and conservative Democrats a reason to vote in a primary contest there is reason to suspect that turn-out in more conservative parts of the state would increase - this presents Franchot with his path to victory.
The greatest obstacle to Franchot would be the entry into the race of another moderate/conservative Democrat - like Howard county Executive Ken Ulman. Not only would Ulman lay claim to Howard county's crucial bloc of voters, he would divide the moderate/conservative primary vote. If that were to be the case, Brown would cruise to victory.
Franchot has one path to the nomination and it requires an undivided appeal to the state's sizeable bloc of moderate and conservative Democrats. His opposition to new tax increases stakes an early claim to those voters and is a wise move.
That said, there is cause for progressives to rally behind him as well. All of the tax increases currently being debated are incredibly regressive taxes that will disproportionately harm low-income and working class families. Raising taxes on gas and increasing fees for auto registration is not like raising the cigarette tax - people can simply decide to stop smoking to avoid that tax. But there is no substitute for gas and in most parts of Maryland public transportation is not an option. Worse, in a weak economy, people have to take jobs wherever they can find them and in a weak housing market they cannot simply sell their home and move to where jobs may be - so they need to drive to work and sometimes they need to drive a considerable distance (especially if you live in rural areas... conservative, rural areas). For low-income and working class families, cars and gasoline are not conveniences, they are crucial lifelines.
That the Governor and the General Assembly would even consider such a regressive assault on the economic well-being of working families is unconscionable. Democrats raising taxes and fees on working families is no less egregious than Republican attempts to cut services to these folks. But Democrats are avoiding more progressive forms of taxation and targeting the poor for the same reason Republicans refuse to consider tax increases for the wealthy and cut programs for the poor - the wealthy vote, but turn-out drops sharply as income levels fall.
Of course the counter argument would be that the new taxes and fees would effect everyone, rich and poor alike. But the poor lose a much greater share of their income to excise taxes and fees. Although state and county-level data is difficult to obtain, federal tax data does demonstrate the regressive nature of excise taxes in general and on fuel specifically. According to the Congressional Budget Office, the bottom 20% of wage earners pay nearly 1% of their income on excise taxes on gasoline and motor fuel alone. By contrast, the top 20% pay only 0.3% of their income on such taxes. When all federal excise taxes are considered, the proportional burden placed on the bottom 20% rises to nearly 2.8%, while the burden placed on the top 20% is only 0.5%. A 3% burden compared to a 0.5% burden... that's the very definition of regressive folks.
Franchot's latest smart move is doubly smart - it appeals to more conservative minded Democrats by calling for greater fiscal responsibility AND it may play well with true progressives offended by the state's attempt to balance its books on the backs of the poor.
Well played Mr. Franchot.
In response to these proposals, Franchot has called for a two year freeze on all new taxes and fees to “give businesses and consumers time to catch their breath.”
A few months ago, Franchot made headlines arguning Maryland needed to be less reliant on the federal sector for job creation. I argued at the time that it was a smart move and showed Franchot was trying to position himself as the conservative option in a Democratic gubernatorial primary that is likely to feature two well-known, and progressive, Democrats - Attorney General Doug Gansler and Lt. Gov. Anthony Brown.
Democrats' routinely win about 60% of the statewide vote so winning the Democratic primary is a doorway to the governorship. Gansler is an unabashed liberal and Brown, the state's first African-American Lt. Governor and an accomplished legislator with an impressive resume, will undoubtedly lay an early claim to the significant African-American vote. So Gansler and Brown will split two of the most reliable segments of the Democratic primary voting population - liberals and African-Americans.
This creates an opening for a moderate to conservative Democrat to lay claim to white, moderate and conservative Democrats, of whom there are many in Maryland.
But the situation is even better for Franchot. The three Democratic power centers in Maryland are Baltimore City, Montgomery county, and Prince Georges county. Democrats routinely lose most of the other counties in the state, but win those population centers. In a primary contest, a candidate who could claim those regions would be unbeatable - but if they are divided then the state's remaining, and far more conservative counties, become crucial. Brown hails from Prince Georges county and if he is able to consolidate the African-American vote then he is likely to claim Prince Georges county and Baltimore City - much as Kweisi Mfume did in the 2006 Senate primary against Ben Cardin. Cardin bested Mfume by winning Montgomery county, Baltimore county and Anne Arundel county by nearly 2-to-1 margins.
Gansler and Franchot are from Montgomery county and both have held elective office there. They would likely split the county's vote. If one were to return to the 2006 Senate primary, a cursory review of election results would seem to suggest that Gansler and Franchot splitting the vote outside of Baltimore City and Prince Georges county would benefit Brown. But the 2006 Senate primary was missing something, something Franchot is looking to bring to the 2014 gubernatorial contest - a moderate/conservative option for Democratic primary voters. In 2006, Democratic turnout in more conservative counties (Allegheny, Carroll, Frederick, Washington) was below overall turnout. If Franchot offers moderate and conservative Democrats a reason to vote in a primary contest there is reason to suspect that turn-out in more conservative parts of the state would increase - this presents Franchot with his path to victory.
The greatest obstacle to Franchot would be the entry into the race of another moderate/conservative Democrat - like Howard county Executive Ken Ulman. Not only would Ulman lay claim to Howard county's crucial bloc of voters, he would divide the moderate/conservative primary vote. If that were to be the case, Brown would cruise to victory.
Franchot has one path to the nomination and it requires an undivided appeal to the state's sizeable bloc of moderate and conservative Democrats. His opposition to new tax increases stakes an early claim to those voters and is a wise move.
That said, there is cause for progressives to rally behind him as well. All of the tax increases currently being debated are incredibly regressive taxes that will disproportionately harm low-income and working class families. Raising taxes on gas and increasing fees for auto registration is not like raising the cigarette tax - people can simply decide to stop smoking to avoid that tax. But there is no substitute for gas and in most parts of Maryland public transportation is not an option. Worse, in a weak economy, people have to take jobs wherever they can find them and in a weak housing market they cannot simply sell their home and move to where jobs may be - so they need to drive to work and sometimes they need to drive a considerable distance (especially if you live in rural areas... conservative, rural areas). For low-income and working class families, cars and gasoline are not conveniences, they are crucial lifelines.
That the Governor and the General Assembly would even consider such a regressive assault on the economic well-being of working families is unconscionable. Democrats raising taxes and fees on working families is no less egregious than Republican attempts to cut services to these folks. But Democrats are avoiding more progressive forms of taxation and targeting the poor for the same reason Republicans refuse to consider tax increases for the wealthy and cut programs for the poor - the wealthy vote, but turn-out drops sharply as income levels fall.
Of course the counter argument would be that the new taxes and fees would effect everyone, rich and poor alike. But the poor lose a much greater share of their income to excise taxes and fees. Although state and county-level data is difficult to obtain, federal tax data does demonstrate the regressive nature of excise taxes in general and on fuel specifically. According to the Congressional Budget Office, the bottom 20% of wage earners pay nearly 1% of their income on excise taxes on gasoline and motor fuel alone. By contrast, the top 20% pay only 0.3% of their income on such taxes. When all federal excise taxes are considered, the proportional burden placed on the bottom 20% rises to nearly 2.8%, while the burden placed on the top 20% is only 0.5%. A 3% burden compared to a 0.5% burden... that's the very definition of regressive folks.
Franchot's latest smart move is doubly smart - it appeals to more conservative minded Democrats by calling for greater fiscal responsibility AND it may play well with true progressives offended by the state's attempt to balance its books on the backs of the poor.
Well played Mr. Franchot.
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