BLOG: Tax Hikes and Gas Tax, for Real?

I prefer to stay out of politics; it gives me wrinkles!  But I do care about things that politics directly affect in my daily life, which is everything.  That’s why I ask you my neighbors to keep watch what is going on in the Maryland Capitol because it affects you too.  I couldn’t believe my ears this morning when I heard about the preposterous proposed gas tax by the Governor of Maryland.  Gas prices have been rising steadily and may exceed $4 soon then they want to place 6% on top of that?

Tax hikes and gas tax in Maryland will not help stimulate the economy during this time when it needs it most.   It will hurt if not kill the surviving small business in our community.   How many small businesses have closed to this date?  What are small businesses?  These are our neighborhood coffee shops, restaurants, specialty shops, garden shops, home improvement contractors, bakeries, hair salons, etc. 

In the past years, whenever we receive the tax refunds it meant cash for necessary home improvements such as replacing a leaky roof, replacing old carpets, home repairs, finishing the basement, yard projects etc.  All these are done by small businesses that employ carpenters, plumbers, electricians, painters, roofers, etc.

It doesn’t take an expert economist to say that during these days, most people who relied heavily on credit cards cannot stimulate the economy because they have either maxed out or can’t get any new credit.  People who were prudent with their finances but unfortunate to have bought their homes in the wrong time are still underwater can’t help either.  Folks who lost money in the stock market through their investments and/or retirement accounts has not recovered yet.  Small businesses now more than ever rely on the people who have discretionary income (it’s what’s left after taxes and basic needs have been paid).   The more money taken away would mean more folks cutting back on: eating out in restaurants, home improvement projects, shopping in the boutiques, getting groomed at the hair and nail salons, etc.  In turn these small business will have less jobs.  Less jobs, less money to go around.  This situation makes the individual investors stay out of the market. The economy stagnates and/or decline in this scenario. Get the picture?

It also appears that the majority of individual investors are also not convinced about the stock market. This Wall Street Journal chart shows that they have continued to move money out of stocks as the market has moved higher. Even at the end of 2010, when the market was rising sharply and was technically strong, investors were still moving out of stocks. -Tom Aspray of Forbes Magazine

According to the world market indices, the economy is improving but it’s still very fragile.  The market crash of 2008 has demonstrated to us how we all are linked in the global economy. The people who think that only the “rich”($100K income or more) are the only ones directly affected by tax hikes are sorely mistaken.  The low to moderate-income earners feel the pinch too.  The high gas prices hit everyone bull’s eye and gas tax will add insult to injury.

If a government aims to stimulate business growth and economic development, why will they want to take more money away from people who have the capacity and propensity to make it happen?  The government does not have to worry about missing out on the action because of the current sales tax, which is by the way have already been taxed (income tax).  Is it too much to ask that the government operate within present means so that everyone will be able weather out this tough economy?