New Maryland sales tax is really MORE than 6 percent
Maryland's higher, 6 percent sales tax took effect Thursday and drew plenty of comment. "Do I give the extra penny to you or do I send it right to Gov. O'Malley?" somebody queried the cashier as I stood in line to buy breakfast. Until Thursday Maryland sales tax had been 5 percent.
Forgotten, however, is that the old rate was actually often more than 5 percent, and the new rate will often be more than 6 percent. Why? Unlike many states, Maryland rounds the tax up to the next-highest penny even if a strict, 6 percent calculation says only a third or a fourth or a 10th of an extra penny is owed.
So if you buy a $1 worth of nails, the 6 percent tax is 6 cents, naturally. But if you buy $1.01 worth of nails, the "6 percent" tax is 7 cents -- at least in Maryland, where legislators sometimes wonder why the state gets a reputation for being tax-greedy. Actually, of course, a 7-cent tax on a $1.01 sale equals 6.93 percent. I didn't hear anybody in Annapolis talking about raising the sales tax to 6.93 percent.
This is not how your third-grade teacher taught you to round numbers. Most states use "mathematical rounding," in which the tax isn't bumped up to the next penny unless at least half an extra penny is owed. Maryland's little scheme nets it an extra $18 million a year, the comptroller's office has calculated.
Sometimes tax increases are necessary, and sales taxes aren't a bad way to raise revenue. But it would have been nice if, even as they raised the rate, legislators had ended the fudge and make 6 percent mean what it says.
Comments
I think the State of Delaware just got a few miles closer.
Posted by: John Turner | January 4, 2008 11:35 AM
Jay,
I was in Ocean City over new years and I saw a sign on a store front that read something like this "NEW LOCATION: BETHANY - NO SALES TAX, SEE YOU IN DE. I'd say let O'Malley see that but methinks he could care less. I've started referring to money as O'Malley Fun Bucks, it makes me chuckle a little as I get fleeced.
Posted by: bryanintimonium | January 4, 2008 12:39 PM
I'm going to get angry every time I look at a sales receipt for the foreseeable future. For every dollar I spend, another penny is going to a government that treats me as a second-class citizen.
Posted by: Mike Klein | January 4, 2008 2:42 PM
MUAAHAHAHAHAHAHA!!!!!!!!!!!!!!!!
You stupid suckers!!!!! Just wait until I become President!!!
'R" is for RIP OFF!!!!!!!!!!!!!!!!!!
Posted by: Martin O'Malley | January 4, 2008 2:55 PM
don't know why everyone is talking so bad about the great O'Malley, you voted him in . now you got what you wanted, that is why i moved to pennsylvania and am in the process of selling my 2 businesses that are located in balto.
Posted by: Michael B. | January 4, 2008 4:57 PM
I think that if you multiply 85 cents by the new 6% tax you will find the tax rate is much higher than advertised. I vow to shop the internet much more!
Posted by: Philip Link | January 5, 2008 8:41 AM
Corruption is abundant in Maryland and no one does anything about it
Posted by: Cheryl D | January 7, 2008 9:49 AM
Why would we expect anything different from the Annapolis crew of Busch, Miller, and O'Malley? To think, Democrats raising taxes!!!
Posted by: Greg Grapsas | January 7, 2008 3:04 PM
Ehrlich was a great governor, I dont know why we voted him out, oh yeah, that's right he wasn't a democrat. I know of people that moved out of Maryland as soon as O' Money was voted in. I wrote my state representatives about voting against the new sales tax. They agreed and also told me, "Maryland does not have a revenue problem; it has a huge spending disorder." That's the truth. stop the spending.
Posted by: Randall T | January 14, 2008 12:45 PM
Geez, what a bunch of whining. It's not 6.93% in any case where the 0.93% is more than a penny. Today I saw 2 pennies lying on the ground and didn't stoop to pick them up. Who cares? I didn't even notice this sales tax increase until Feb!
Posted by: Big Whine | February 26, 2009 8:21 PM