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	<title>Comments on: Why Do Democrats Believe That Basic Laws Don&#8217;t Apply to Them?</title>
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	<link>http://www.delmarvadealings.com/2008/09/30/why-do-democrats-believe-that-basic-laws-dont-apply-to-them/</link>
	<description>Political Dealings In and Around the Delmarva Peninsula</description>
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		<title>By: Marc</title>
		<link>http://www.delmarvadealings.com/2008/09/30/why-do-democrats-believe-that-basic-laws-dont-apply-to-them/comment-page-1/#comment-4858</link>
		<dc:creator>Marc</dc:creator>
		<pubDate>Wed, 01 Oct 2008 03:20:54 +0000</pubDate>
		<guid isPermaLink="false">http://www.delmarvadealings.com/?p=2659#comment-4858</guid>
		<description>I&#039;m glad you enjoyed the article. Thanks for mentioning it. To elaborate, raising taxes affects demand in many ways, not just curtails it. It also shifts it. For instance, if you raise the cigarette tax from $1 to $2 a pack as the General Assembly did, you will have people who take steps to avoid that tax. Their demand won&#039;t be curtailed, but how they satisfy that demand will be. When they are in Delaware, for instance, they&#039;ll pick up a few extra packs. We see that happen a lot in this area. The whole furniture business in Delmar is predicated on this economic fact.

As to spending -- in good economic times, politicians can get away with increasing spending. We saw it happen in the 1990s and the middle part of this decade. Tax revenue was increasing more than anticipated due to a good economy. If they don&#039;t give it back to taxpayers as tax cuts it just means more money for them to spend. But when a recession hits tax revenue declines or rises at a much slower rate than anticipated. The only way to bring the budget into balance is to cut spending. It&#039;s difficult to raise taxes in that type of economy in a way that will produce the anticipated amount of revenue. Maryland legislators certainly don&#039;t know how to do this. The state&#039;s budget problems will only be solved by cutting spending or with a dramatically improved economy. I don&#039;t know which one is more likely.

Although I&#039;m in favor of limited goverment, nothing I&#039;ve said above is ideological. It&#039;s just the facts about how government spending works. Politicians must face up to these facts if our state is to get its fiscal house in order.</description>
		<content:encoded><![CDATA[<p>I&#8217;m glad you enjoyed the article. Thanks for mentioning it. To elaborate, raising taxes affects demand in many ways, not just curtails it. It also shifts it. For instance, if you raise the cigarette tax from $1 to $2 a pack as the General Assembly did, you will have people who take steps to avoid that tax. Their demand won&#8217;t be curtailed, but how they satisfy that demand will be. When they are in Delaware, for instance, they&#8217;ll pick up a few extra packs. We see that happen a lot in this area. The whole furniture business in Delmar is predicated on this economic fact.</p>
<p>As to spending &#8212; in good economic times, politicians can get away with increasing spending. We saw it happen in the 1990s and the middle part of this decade. Tax revenue was increasing more than anticipated due to a good economy. If they don&#8217;t give it back to taxpayers as tax cuts it just means more money for them to spend. But when a recession hits tax revenue declines or rises at a much slower rate than anticipated. The only way to bring the budget into balance is to cut spending. It&#8217;s difficult to raise taxes in that type of economy in a way that will produce the anticipated amount of revenue. Maryland legislators certainly don&#8217;t know how to do this. The state&#8217;s budget problems will only be solved by cutting spending or with a dramatically improved economy. I don&#8217;t know which one is more likely.</p>
<p>Although I&#8217;m in favor of limited goverment, nothing I&#8217;ve said above is ideological. It&#8217;s just the facts about how government spending works. Politicians must face up to these facts if our state is to get its fiscal house in order.</p>
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