Wednesday, August 8, 2007


AP has not reviewed many letters to the editor recently--partly because we have covered many of the topics of these letters already, and partly because MTV has been airing back-to-back episodes of Made.

But the time has come. This letter is a tad wacky, but touches a few important issues:

Gov. Martin O'Malley wants to ease the state's deficit by not letting the rich pay just the 4.75 percent paid by everyone who earns $3,000 or more, a setup he calls "patently unfair."

The letter writer is referring to the Maryland Income tax. Now then, collecting the SAME PERCENTAGE of taxes from EVERYONE is THE FAIREST tax system you could possibly have. O'Malley's quote was:

"O'Malley called the structure "patently unfair" this week, saying at a Democratic breakfast in Frederick that Peter Angelos, the wealthy trial lawyer who owns the Baltimore Orioles, should not pay the same rate as "the woman who cleans his office".

Uhhh, geez....Governor....didn't anyone tell you: 4.75% of what Peter Angelos makes is a lot MORE than 4.75% of what the housekeeper makes. Why shouldn't everyone pay the same rate? The American Dream is to work hard and get rich...why are we penalized for doing this? Ok letter writer, continue.

Why not have the rich pay 10 percent for incomes over $100,000 and 20 percent for those over $200,000?

Why stop there? How about 100% for $1 million? Great. So the most anybody can make is $1 million, because every dollar after that goes to the government. Then, nobody would have the incentive to keep working hard, and productivity would decline! Excellent! Wait a minute....

Constellation Energy's chief executive officer is taking home $20 million a year.

Making money is not a crime; it is not evil. 99.97% of all people in history would have liked to make as much money as possible. I rather enjoy how you singled out this corporation, being that they are involved in the electric rate hikes, and so forth. The fact is, he is paid that much because that's how valuable he is to the company. If Constellation Energy thought they could achieve the same results by paying less money, I promise you they would do it.

The rich get a lot of their money out of the middle class and the poor.

I can't let this one go. First of all, this is such a vague generalization that it can't be true, even if we understood what you were trying to say. People are paid what they are worth; sometimes there are distortions and people don't make exactly what they are worth, but in the long run your compensation equals the value of goods or services that you produce.

The important point here is that in a capitalist economy without coercion, the value of goods and services is determined through trillions of VOLUNTARY transactions. So, if a middle class or poor person decides to buy something, they are by definition using the price system of the free market to transmit the message that the good or service improves their life. So long as money is spent voluntarily, transfers of money from rich to poor, or poor to rich--indeed all transfers--are beneficial to both parties. (Such a transaction is said to be Pareto Optimal)

Meanwhile, Senate President Mike Miller, D-Calvert, wants to hike the "regressive" sales tax--which, in hitting all buyers at the same rate, hurts the rich less, and hurts the middle class and poor more.


House Speaker Mike Busch, D-Annapolis, wants another regressive measure, a 5 percent hike in state college tuition. His opposition to higher tuition was one of the big reasons many of his constituents campaigned and voted for him in 2006.

First of all, he is one of the most 'machine-backed' politicians in the state, and his constituents damn near voted him out of office in 2006. If it hadn't been for such widespread dislike of the Republican President at that time, I bet we wouldn't be having this conversation. Second of all, a hike in college tuition is not regressive in the manner that you speak of because it is not a tax--it is not imposed on all taxpayers by the government. It is imposed on people who CHOOSE to attend the university. On a side note, tuition freezes are bad.

Many parents and students have already been forced into debt to meet tuition increases. Mr Busch's hike would be a vicious blow to lower middle class and poor families who struggle to get their kids through state colleges.

Going into debt is not an uncommon practice for college. People calculate that going to college will help increase their human capital--an investment in themselves--that will help them earn more money in the future so they can pay off their debt and then some. Banks think this too, and will give you student loans. If somebody decides this process is not worth it, they can CHOOSE not to go to college.

Back across the hall, Mr. Miller is pushing for his favorite plague on the poor--slot machines. It's a boldface lie that slots will ease the deficit. The state's take must finance more regulators and inspectors, and more counselors for gambling addicts and for the families of gamblers who commit suicide.

Do the poor not have minds of their own? If they think slots are a plague, they can avoid them like anyone else could. Also, how can slots NOT ease the deficit? Estimates place the boost in taxes from slots at $500-$800 million. How many inspectors do you need? Also, here's an idea: families support themselves and don't allow their relatives to get addicted to gambling or commit suicide. In the horrible and unlucky event that a relative does commit suicide, why is it the responsibility of the taxpayers to pay for the grieving process?

The kneejerk reaction to the deficit is to saddle the weak (and) the poor with it. Where are the ideas for making the strong and the rich--and the corporations, developers and utilities--shoulder some of it? Half of Maryland's largest for-profit corporations pay no income tax at all!
J.A. HOAGE, Severna Park

OMG!! The top 10% of income earners pay like 65% of the total taxes. I would say that the rich not only shoulder 'some' of the tax burden--they shoulder most of it. Also, do you work for either a corporation, developer, or utility? Odds are you do, or someone close to you does. If you keep penalizing corporations, they will move to a different state that is nicer to them. This is why some corporations (legally) avoid some taxes now. And, if you keep raising taxes on corporations, they will face a higher cost structure. They will have to raise prices on whatever they are selling. Since fewer people will buy from that corporation after they raise the prices, the corporation will not have as much work or make as much money. The you, or someone close to you, will lose your/their job.

There is no magic tax solution. All taxes necessarily re-distribute income and create deadweight loss. The less the government spends, the less this will happen.