Republican vs Democrat

Image via WikipediaThere have been two separate news stories here in the DC area in the past couple weeks that I think is a microcosm of the differences between Republican philosophy and Democrat philosophy.  The two stories involve the governments of local neighbors, Virginia and Maryland.  Virginia is led by Republican Governor Bob McDonnell, while Maryland, which is about as blue a state as can be, is led by Democrat Martin O'Malley.

In these tough economic times, like most states, the two governors have been faced with difficult budgetary decisions.  The approach of the two men couldn't be more drastically different.  McDonnell was adamant when he took office that he would not increase taxes as a way to make up for any budgetary shortfall.  He made the decision to go through the budget and make tough, but necessary, spending cuts.  He has also worked to make Virginia a business friendly locale.  The result was released this week that Virginia expects to have a $311 million surplus.

O'Malley, on the other hand has taken the opposite track.  Currently, Maryland is facing a structural deficit of over $1 billion dollars.  At a time when most states are trying to curb spending, O'Malley keeps spending.  The state recently passed it's version of the Dream Act to give illegal immigrants in state tuition rates, which is expected to cost the state millions.  The Baltimore Sun reported that Maryland has the 4th highest tax burden among the 50 states and had the 4th highest increase in spending among the states.  It also stated that Maryland ranked 50th of the 50 states in job creation according to the Department of Labor.

The Washington Examiner reported last week that the Maryland State assembly will be holding a special session aimed at looking at how to close the budget gap.  The article basically states they are looking at anything and everything that they can tax that isn't already being taxed.  They will be looking at taxes on snacks, medicines, on line sales, and increasing the gasoline tax.  This after the regular general session resulted in increases in the alcohol sales tax and increases in several fees, which really are nothing more than taxes.

The results in the two states couldn't be more different.  Virginia, while not raising taxes, has actually increased tax revenue by creating an atmosphere conducive to business.  By growing jobs, there are more people paying taxes, thus increasing revenue.  That is the essence of Republican philosophy of job creation.  A case in point being Northrup Grumman's decision to locate new offices in Virginia rather than Maryland. 

While Maryland is always near the top 10 in state tax burdens, Virginia is usually in the mid-30's.  Texas, by the way, has the 45th ranked tax burden and has one of the best state economies in the nation.  The reality is that if you want to increase tax revenues, the answer is not new taxes.  The answer is to have more taxpayers.