Congratulations! You may not have realized it was happening, but your municipality has put you in a special revitalization zone which means the property taxes you owe them will quintuple. That’s the message some suburban Maryland business owners got recently, subject of my recent Cato piece. Excerpt:
Specialists in local and state government policy are full of ideas for business-by-business and location-by-location tinkering with tax rates, both downward (as part of incentive packages to lure relocating businesses) and upward (to finance special public services provided in some zones, such as downtown revitalization). But there is a distinct value in terms of both public legitimacy and the rule of law in having uniform and consistent taxation that does not depend on whether a property owner or business is on the ins or on the outs with the tax-setting authorities.
[cross-posted from Overlawyered]
Gallup finds that even after controlling for other factors, there’s a “strong relationship” between total tax burden and the level of desire to leave a state [Steve Malanga, City Journal] And just a reminder of its relevance to us: “Maryland Has the 7th Highest State and Local Tax Burden” [Randolph May, Free State Foundation]
“In the ensuing 1794 Whiskey Rebellion…the locus for noncompliance and violence against tax agents was largely western Pennsylvania, but not entirely. Early local newspapers reported disturbances, such as the erection of 1776-style townsquare liberty poles, in Cumberland, Hagerstown, and Middletown….At one point, even Frederick was tense — rumor had ‘the Whiskey Boys’ headed that way, to empty its state arsenal of weapons.” — James H. Bready, “Maryland Rye: A Whiskey the Nation Long Fancied — But Now Has Let Vanish,” Maryland Historical Magazine, Winter 1990. “To a legion of fanciers, the best Maryland Rye was on a par with whatever else might be nominated as the ne plus ultra of American whiskey.”
For any real chance for Baltimore to bounce back economically, you need to cut its high property taxes. Reihan Salam argues the case, drawing on work by Stephen Walters (Loyola Maryland) and others. As a percentage of value Baltimore’s property taxes are not as extraordinarily high as Detroit’s, but in both cities the tax has contributed to severe problems of property abandonment.
From a Facebook discussion, Bruce Godfrey:
One other effect of Baltimore city’s high property taxes is the disproportionate concentration of nonprofit organizations in the city. These nonprofits are exempt not only from income taxes on their operations, but every asset they own is exempt from the state real estate and personal property taxes, which are more than twice those of the county surrounding it.
More: Lengthy new piece on Baltimore abandonments by Washington Post reporter Terrence McCoy never mentions property taxes. So they must not be a problem!
This J.D. Tuccille piece at Reason has a familiar feel, given the bid by some of our own lawmakers here in Maryland to increase cigarette smuggling, and give crime gangs a giant new source of revenue, by raising tobacco taxes further toward New York levels, and far above the levels charged a half-hour’s drive to the south. Earlier here and here.
More: Village Voice longform (“Smuggled, Untaxed Cigarettes Are Everywhere in New York City”)
In a Saturday editorial, the Washington Post calls for further hiking Maryland’s tobacco tax so as to push the state’s smuggled-cigarettes rate, currently around 20%, closer to New York state’s Bloomberg-influenced, nation-leading 57%. The New York policy has proved a highly effective way to bring petty and not-always-so-petty crime to New Yorkers’ everyday lives. With I-95, I-70 and other corridors, Maryland is already one of the most accessible states for contraband smugglers, and if the Post has its way organized gangs on the streets of Baltimore stand to get their hands on a new cash engine that, as one Brooklyn distributor is said to have boasted on wiretap, is “better than selling drugs.” What could go wrong?
P.S. The Post’s editorial never even mentions smuggling or evasion of the law, let alone bring up the Eric Garner case in Staten Island, although the Post’s own news analysts and opinion writers have repeatedly explored the role of taxes in that case. Is it too much to ask of the Post editorialists that they keep up with their own paper? [rewritten and expanded; cross-posted at Cato at Liberty]