With tax plan A, you get egg roll

Dan Rodricks

January 22, 1992|By Dan Rodricks

This year, raising taxes could be as simple as ordering dinner at a Chinese restaurant. Legislators can choose taxable goodies from column A, from column B, and from column C, and maybe the budget deficit will become easier to digest. Ingenious.

If I were a state legislator, I'd never admit it. But if I were a state legislator and willing to admit it, I'd be very happy with the way the Maryland Department of Fiscal Services presented facts and figures the other day. I'd be champing at the bit to order dinner, too.

Legislators have to decide whether to raise the state sales tax, currently 5 percent, or to "expand the base" of goods and services that are subject to tax. Some goods and services -- such as newspapers and dry cleaning -- are currently exempt from the sales tax.

So the Department of Fiscal Services presented a menu of "potential revenue sources."

Items in column A are considered very appetizing. They are currently exempt but probably shouldn't be, budget analysts said. Tax them and the state's cash register will ring right away. For beleaguered politicians looking for more revenue, the items in column A smelled like Peking Duck.

A "B" rating was, of course, a middle-of-the-road rating, the Moo Goo Gai Pan, if you will, of this proposal. That meant there was a good side, but also a down side, to removing the exemption.

And a "C" rating meant the exemption should probably stay and that removing it would have a negative fiscal impact. In other words, it was Stir-Fried Pig Lips. Services that got the "C" rating included accounting, engineering and legal services, which I'm sure was music to the ears of all those attorneys we've elected to the General Assembly, not to mention Stephen L. Miles.

So it's the goodies in column A that senators and delegates will be looking to tax. Put the sales tax on those goodies and -- poof! -- state government is about $200 million richer.

I can see them drooling now.

This idea of "expanding the base" for the sales tax must be very appealing to senators and delegates. They are an unimaginative lot and they sometimes stumble in their attempts to pick the public's pocket. If you are down in Annapolis, facing a $1.2 billion deficit and the prospect of having to simultaneously cut services and raise taxes, then the Chinese restaurant method looks a whole lot better than the Levitan method.

The Levitan method is named after its proponent, Larry Levitan, RTC chairman of the Senate Budget and Taxation Committee. It's far too simple. Levitan wants to raise the sales tax to 6 percent.

But raising the sales tax would play differently with the public than the Chinese restaurant plan.

The Chinese restaurant plan is a more subtle approach. Politicians probably prefer it because they think taxpayers won't notice it as much.

If they put a tax on dry cleaning, who moans? The guys at the One-Hour Martinizing? Nah. People who can afford to dry-clean their clothes are going to continue to dry-clean their clothes, which probably means a sales tax on this service is not as regressive as you might think. After a few months, people won't even notice. For a pol, that's the beauty of the thing.

Same with barber shops and beauty salons. How is a sales tax going to hurt the hair industry? The only thing that hurt the hair industry in the past three decades was the arrival of the Beatles. People will continue to get clipped, 5 percent sales tax or not. And if there's a Lola or a Juan in your life (in mine, there's a Paul and a Rose) -- that special person who knows your hair better than anyone -- you are not about to dump 'em and go to Delaware to save a few bucks on a haircut.

I'm sure we'll hear a lot of squawking about a sales tax on cable television. But spare me. Despite the popularly held belief that the right to cable appears in the Constitution, it's still a luxury. Why shouldn't it be taxed?

How about a tax on food that comes out of salad bars and soup bars in supermarkets? Why should it be exempt if food from carryouts and in restaurants is not?

A sales tax on funeral service -- another column A treat -- is distasteful. We already have a tax on caskets and vaults, which is equally distasteful. This is bad business for the state. So I'd scratch that one from the menu, fellas. Death is bad enough without getting taxed for it.

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