Maryland's proposed gas tax increase of 10 cents per gallon would hit families at the poverty level 5 times harder than the average family within the top 25% of tax payers. This is the epitome of regressive taxation.
For a family with income of $162,279/year (the average income of the top 25%), the tax would equal a miniscule 0.08% of their income based on typical gas consumption of 1309 gallons per year. A family at the poverty level ($14,710-$18,530 depending on household size of 2 or 3, MD's average household size is 2.6), would pay .38% of their income based on typical gas consumption of 632 gallons per year, that's 4.75 times more than the wealthy household.
If anyone dismisses the significance of raising taxes almost half a percent on the poor, while not even raising them a tenth of a percent on the rich, they probably have never lived like a poor person. If you haven't run out of gas because you've run out of money, gotten home with the change you scrounged off from under your floor mats to ask for "$1.75 on pump #2 please" paid for with a fistful of dirty pennies and nickels, and suffered the embarrassment of going through the grocery store checkout line with nothing but ramen noodles because you needed to budget for gas, then you probably can't comprehend the significance of taking another half a percent of a poor person's wages, or recognize the flagrant injustice of doing so at the same time you are taking less than a tenth of a percent of a rich person's wages.
There is little else that would rival the draconian regressiveness of Maryland's proposed gas tax. Perhaps Maryland could choose to tax groceries or heating bills. Perhaps a new tax that only applies to the first $8,500 of income-whoops, they already did that.
I propose 2 much better alternatives:
- Cut spending. Yes, the bulk of MD's budget goes to education, health, and public safety, however:
- Half of those employed in education are not teachers. They are "other." It is very possible to cut money from the $13 billion MD spends on K-12 education, without cutting teachers or teacher pay.
- MD spends almost 2 billion a year on public safety (to include police and prisons), perhaps tight times are the time to re-evaluate the war on drugs given that about 50% of all police and prison spending is devoted to it.
- MD spends another $2.4 billion per year on higher education. Stop subsidizing frat parties and focus the subsidies on online learning.
- UMUC (University of Maryland University College) spends only 28% of their budget on instruction. Even adding in research and operations/maintenance, the figure is only 38%. That's 62% of a $300M/year budget spent on administration. Does the university really need to spend $300k on a figure head position that quits for unexplained reasons?
- Does College Park really need to spend $7.2M for a new house for their overpaid figure head?
- Do away with mandatory art class past elementary school. By 6th or 7th grade, everyone knows who has artistic talent, and who's simply burning through art supplies. Keep it as an elective and spend a more focused, smaller amount of resources on the kids who have talent.
- End public pensions. Only 20% of the private sector gets them, why does 80% of the public sector?
- Stop overpaying contractors who do state construction projects. Their concentrated benefits are the diffuse costs borne by tax payers, and in the instance of the gas tax, the poor.
- A progressive property tax, and/or a progressive vehicle registration fee and/or progressive vehicle sales tax. Such a system is straight from the Wealth of Nations so much so that you could coin it the "Adam Smith Tax."
Regardless of your ideological preference on the spectrum of tax increases versus spending cuts, we should all agree that taxes that hit the poor 5 times harder than the rich are simply wrong. It is pure cowardice to go after this group that is least able to defend itself. To anyone in the MD General Assembly who is considering this: Grow a pair and either sock it to the rich, or take on the well organized special interest groups who would howl at the spending cuts.
U.S. Energy Information Agency, gas consumption by income: http://www.eia.doe.gov/emeu/rtecs/nhts_survey/2001/tablefiles/table-a10.pdf
IRS 2008 tax returns crunched by The Tax Foundation: http://www.taxfoundation.org/news/show/250.html
The Urban Institute, more gas consumption by income plus commuting habits: http://www.urban.org/UploadedPDF/411760_rising_gas_prices.pdf