Friday, September 14, 2012

State of Stealth

A battle is being waged in the state of Maryland over the state's desire to expand casino gambling. Huge in the rhetorical arguments of both sides is the claim that more casinos equals more money for education.
History, and the state constitution, teach us one thing. The amount of money collected through the collection of taxes on gambling will equate to a commensurate rise in the total state budget, but the necessary funds for education would have been found regardless.
Look at it this way.
Suppose the state budget included $100 million dollars for education. The state tells us that we don't have sufficient funds to give our children a quality education. Okay, you say. The state promises to allocate the taxes collected from the casinos to education, so give me more gambling statewide.
The first year's tax collection nets $50 million in casino taxes, and you see the education budget rise by $50 million. Ah, you say to yourself, the state was telling the truth. The money did go to education.
But this is a half truth.
You see, the state is obligated to provide a quality education for our children. If that meant to raise the education budget by $50 million that would have occurred whether or not the casinos were taxed. Without the casino tax, either discretionary spending would have suffered, or other taxes would have been raised to cover those discretionary items.
Let's say you live on a fixed income and the cost of food goes up. What do you do? If you have no way to increase your income, you need to pull money from somewhere else in your budget to cover that increase. Maybe you give up going out to the movies. Maybe you cancel your cable subscription. But you still eat. Cable is discretionary, eating is not,(although you can do a better job with the cash you have for food by making better choices at the grocer.)
A less that ethical individual would go to the local food bank and ask for food but not reduce their discretionary spending, thus having their cake and eating while watching the movies too.
This is precisely what the state is doing.
I'm sure spending on education will rise.
But at what cost to the citizens? The casino money came from the citizens in the first place.
Can you say "Stealth Tax?"

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