A litany of issues, large and small, has made our slice of the world think about how it is represented in Annapolis and DC. Surveying the lay of the land, there are two prevailing schools of thought. The first school professes that the 36th is best served by those who possess the ability to “speak Democrat.” The other school professes that the 36th is best served by a proverbial nailing of Martin Luther’s 95 theses to the doors of the General Assembly. I suppose that in its simplest form, we are told that our choice is between a left and a right.
This false dilemma is not unique to the 36th District. A movement is afoot to create the State of South California. Back here on the right coast, similar murmurs can be heard. Of course, there really is no serious proposal to create the State of Delmarva. If anything, such talk is the ultimate visceral reaction. Keeping the school metaphor alive, secession talk is the PhD program of the second school.
While some have placed this bit of bandwidth in the visceral column, Troup’s Corner actually seeks to open a third school. This school professes that a position can be articulated within the confines of Annapolis’ rules while preserving the self-sufficiency tenet of conservatism. The battle between the school on the right and the school on the left ensures that Maryland’s government remains top heavy, leaving little room for disadvantaged areas to become economically viable. This is why opening the school of up has become critical.
The Eastern Shore’s economic woes were recently positioned in a wonderfully succinct manner. Our area suffers from a trade deficit with the State of Delaware and the I-95 corridor. There is a population of people crossing the Bay Bridge to work, eating at those restaurants, and consuming other services over the course of the daily routine. There is a population of people crossing into Delaware to make purchases of goods without sales tax (let’s ignore the use tax element for now and deal with reality). Maryland sees sales tax revenue from the first population. Delaware sees job creation and realizes hidden revenues from the second population.
Local Chambers of Commerce have no control over the State’s sales and use tax statute. The one weapon in their arsenal is an appeal to buy local, which becomes a form of guilt. But can anyone really blame consumers? Think about inflation and the CPI from one year versus the next. Now think about six percent, day after day.
Think of this from the State’s point of view. They need revenue. The State levies taxes on a variety of fronts, essentially hedging their bets when incomes or property values go down. Because consumerism accounts for so much economic activity, sales taxes have been seen as a lucrative means of taxation.
The dirty secret of sales and use tax, as currently constructed, is that it is a regressive tax. Lower income earners spend a higher percentage of their income. As a result, the six percent affects them more than the higher income earner.
The sales tax is also rooted in an economy born out of Industrial Revolution America. Maximum revenue is predicated upon the production and consumption of tangible goods. Our economy has transitioned from a goods economy to a service economy. This leaves a sector of the economy to operate somewhat tax free.
The sales statute, as written, contains loopholes when viewed from a 21st century perspective. For example, software you purchase from a retailer is an actual thing (a CD), and is assessed sales tax. Businesses often purchase software licenses from major providers (Oracle, SAP, etc) and usually have it made available to them via download. Currently, that is a service. Where are many of the businesses purchasing thousands of downloaded software licenses located?
So the challenge has been created – how can the State protect its revenues and foster and environment that promotes commerce across the State? One solution is to transition from a traditional higher percentage sales tax and move towards a lower percentage value added tax (VAT). In other words, spread the tax burden across the various sectors of the economy by applying the tax uniformly and at a lower rate. The result would be revenue for the State that is shielded from shifts in the economy, and an incentive for shoppers to conduct their business within the borders of the Old Line State. Ask yourself if $3 per gallon is worth burning in Delaware to save on a two percent tax?
If more transactions were to be conducted on this side of the Mason-Dixon, it would provide an incentive for landlords and developers to refurbish their dilapidated buildings, as well as an incentive for recognizable players in the retail sector to fill the commercial vacancies found up and down the Eastern Shore.
The specifics of such a proposal could get watered down. For sure, medical care, legal defense, education, and electricity for the heating of homes are vital services that would send the wrong message if taxed. On the other hand, what treatment should be given to elective procedures, civil lawsuits, and electricity to power a television?
Another obstacle is the learning curve for the accounting and small business worlds. While a VAT system does away with subjective exemptions, it does allow for taxes paid to be offset against taxes collected.
In the end, the revenue realized would be indicative of the economic activity that occurs in the State. In addition, fair and competitive taxation will close the trade gap between the Eastern Shore and the State of Delaware, which will limit the public money that needs to flow to the region to prop up the lower economic quintiles.
We must come to the realization that Maryland, despite its small stature versus the likes of California, has its own challenges when it comes to governing a physically and economically diverse State. The solutions can no longer come from discussions of right or left. They must come from discussions of up versus down, or as our local broadcaster on WCTR has positioned it, fixes that originate from the bottom up. I turn it over to our readers to determine in which direction this idea points us.
Troup’s Corner Non-Sequitur: Yet another debate took place over the use of speed cameras on the Upper Shore. TC’s official position is this: so long as there is a platform that allows the accused to confront their accuser, then the cameras probably do a better job of uniformly citing scofflaws than the traditional traffic stop. How many times have you witnessed a moving violation whilst alongside or behind an officer’s vehicle. If there are extenuating circumstances, it seems that the old saying is “tell it to the judge.”
It should also be noted that the cameras are triggered at 42 mph in a 30 mph zone. This is essentially allowing an excess of thirty percent. I was baffled by the number of people who had difficulty in calculus with the term “limit.” I could see the ambiguity if the signs said “Integral 30 MPH.” All that said, a discussion of speed limits in Maryland versus other areas is valid. Given the increased safety of our vehicles, do some limits remain artificially low for the purpose of revenue generation?
Every time you have the answer, I change the question!
Carol Mylander says
There was a time not long ago when every county in the State of Maryland had 2 senators each. That was when land was represented and the Legislature represented the population. When the senatorial seats changed , we lost our representation. There is a fine balance between land, water and our population.
I am a bit terrified when I hear the words “The Eastern Shore” as if it is a place, most of Kent County residents really do not know where they live, which town , which district…….. The same goes for “Delmarva” which must have been an attempt of Delaware residents to be included, or a promise from the 301 Association(this highway did not exist until the 50’s) and , of course, Virginia doesn’t really take part in this. Let us think of ourselves as the whole, the State of Maryland.
A wonderful thing for Kent County would be a huge increase in the bridge toll. When it first opened the toll was per car a fee of $2.50 ONE WAY and 50 cents per passenger. Why all the outrage now? People should feel guilty if they buy everyday items like groceries , clothing etc. in a different state. Whatever happened to the pride of supporting our little towns and our corner stores? And there was a time when if you could not find a special item in Chestertown you could actually make it. I owe my creative genius to this very fact.
I suppose I don’t mind paying a sales tax, I certainly don’t rush to Delaware to avoid it. I would rather discover something lovely downtown shopping with friends in front of and behind the sales counters. Let’s get real about this, why did you move here? Discover other ways of being happy other than buying huge quantities of goods. I challenge all of you to buy locally for a month and find your hometown, your local creek !
Don’t even get me stated on how the traffic speeds in front of my house on Washington Avenue. My little grandchildren aren’t allowed in the front yard and must use the sidewalks close to front yards as speeding cars and trucks text their way through town in some kind of hurry I don’t understand. Enjoy slowing down and buying locally and the fast pace you left behind.
MBTroup says
@Carol – One of the fascinating aspects of this project is how a well thought out comment speaks directly to an imminent topic. There is much to chew on here, and I want to give it its due. Sometimes people use “you” and “your” in a general sense, and sometimes its specific. So I’ll preface this with an apology if “you” was a general you. I’ll treat the “yous” as questions directed of me.
“I am a bit terrified when I hear the words “The Eastern Shore” as if it is a place, most of Kent County residents really do not know where they live, which town , which district…….. “
Hopefully you saw Carla Massoni’s interview where she talked about coming from the Western Shore. As she notes, such a place doesn’t exist – except on the Eastern Shore (though a drive along I-495 tells you that Maryland is trying to market Calvert and St Mary’s Counties as the Western Shore).
“Let us think of ourselves as the whole, the State of Maryland.”
I believe that my proposal accomplishes that very thing. The population centers of the State aren’t interested in the economic viability of a rounding error; however, convince them that all ships rise with the tide, and things may change.
“People should feel guilty if they buy everyday items like groceries , clothing etc. in a different state. Whatever happened to the pride of supporting our little towns and our corner stores?
If commerce is a series of mutually beneficial exchanges, then the value received by the buyer should equal the consideration paid to the seller. Buyers have rights in this equation, and if they don’t perceive value, they’ll go where they do. There are people beyond 400 High Street who need goods. So we’re left with an attitude change I suppose. Help buyers buy. Shopkeepers would be best served to transition from “I want to sell you some rugs” to “I want to provide the floor coverings for your home.” There’s a subtle difference in those two phrases.
You’re talking to someone who frequents local restaurants and buys what he can from local merchants. But for those coulds that aren’t available? That’s where the trips happen. And when the trips happen, that’s where the “while I’m out” purchases happen.
So we’re back to the vacant store fronts and plugging our trade deficits. If we solve those problems, don’t we all(C’town, Kent County, Eastern Shore, Maryland) win?
Let’s get real about this, why did you move here?
You’ve heard all those answers before. Let’s understand that if left to me (and it’s not), I do not desire to have the place suburbanized (a concession I believe you made in your closing statement). In fact, there are plenty of skeptics regarding this waterfront project. I’m not counted among them. If a sustainable industry leveraging the Town’s assets isn’t advanced, then what’s left IS a sell-out to developers, physical growth economic model that has stolen many a town’s identity.
Discover other ways of being happy other than buying huge quantities of goods.
Amen. See you at the farmer’s market, Wilmer Park, Rock Hall Beach, etc.
I suppose I don’t mind paying a sales tax
Just so we’re clear, I’m not advocating abolition of the sales tax or absorption into Delaware. If anything, my proposal would increase Maryland tax revenues because the bulk load of the transactions occur in one region of the State. More over, if our region is a more competitive market for the sale of goods, more transaction will take place here. More stay at home moms would find holiday work. More of students could find summer work. And we would be contributors to the tax rolls. All ships…
StellaL says
Carol – extremely well put. It is good that others are speaking to this point.
Stephan Sonn says
The Chesapeake could not be managed with new underfunded state in the mix.
Keith Thompson says
Carol writes “People should feel guilty if they buy everyday items like groceries , clothing etc. in a different state. Whatever happened to the pride of supporting our little towns and our corner stores?”
No, not at all. If our little towns and our corner stores are simply setting up shop and expecting the people to shop there because people have an obligation to shop locally, that is a sign of a community with a sense of entitlement. Business owners aren’t entitled to a customer’s business, they have to earn it.
gery maynes says
Hi, I think that its funny that this new state would negotiate and compete with the state of Delaware. While talking about Value added taxes. You think taxes are bad now lets follow Europes value added taxes and the state of Delaware will have to call out the Delaware National Guard to keep to keep order on our borders.
Untill the state of Maryland drops its ridiculous sales tax that cripples the Eastern Shore!s economy, people will continue to invade Delaware for good and services. Perhaps a movement to join the great State of Delaware, would serve the folks of the Eastern Shore much better economically..
A value added tax is so repressive to retail businesses, that they would relocate to Delaware to be competitive. The Eastern Shore would become a commercial Ghost town.
But and united Eastern Shore under Delaware rule would mean the end of these sales taxes, a l,evel Playing Field..
The State of Delaware could make up the loss of this revenue with combined tourist dollars from the combined Shore tourist business.Save money on combining institutions as the Universities of Maryland and Delaware, Del State and Wilmington University.
I mean its not going to happen, but its fun to think about.
MBTroup says
What new State?
Clearly something has been lost in translation with this piece – an epic failing on my part.
Two things:
1. The Chesapeake regions needs funding to be managed. That is true. People see 2<6 (or 1 as I'm sure there are actuarial tables that would tell Annapolis what rate needs to exist to yield x dollars), and assume that this proposal slashes revenue. I submit that revenues would increase, and be easier to manage as we ditch the cocktail of sales tax, excise tax, transfer taxes, toll increases, etc.
2. The takeaway here is the trade deficit that Maryland's Eastern Shore faces. Their is more demand (number of heads and per capita income) west of the Chesapeake Bay Bridge. These folks are able to eat the 6% tax and there is no viable alternative for avoidance. Being in proximity to tax advantaged Delaware, there is a supply shortage (empty storefronts and the resultant jobs). These two have combined to severely limit the commerce that can take place between I-95 and Delaware.
By enticing more retail activity on the Maryland side (through a lower tax rate), but applying it uniformly (e.g. the software loophole i mentioned), the State will get its needed revenue and it will fall in line much more with where the activity occurs. To steal a line, it's not about paying more taxes, it's about creating more tax payers.
j Huey Brown says
When i travel and tells people i’m from maryland, the first thing they say is what wrong with Baltimore, then i have to explain no i’m from the eastern shore you know the the part of maryland that is not delaware. Read Ed Okonowicz a local author that writes about ghost stories and life in general on the ‘shore, also read gilbert byron, for people who move here from the western shore the must be made mandatory ” the Lord’s Oyster’s”, “Chesapeake Duke”, “Done Crabbin”. These books highlight life in prohibtion era chestertown, most of the listed families from the books are still living in the area.