Economists and lawmakers often like to talk in grandiose numbers. A tax increase will raise millions of dollars. A tax cut will save millions of dollars. For the average person balancing their budgets, these numbers are abstract and don’t mean anything.
That is, until the numbers actually affect them—and their wallets.
This was illustrated first hand to me twice this week, for better and for worse.
First, the bad. Pepsi announced on Monday they were closing a production plant in Baltimore. The closure means 77 people will lose their jobs. In a city where the unemployment rate is hovering at 11 percent, any job loss is painful. What makes this loss even worse is the company blamed the closure on Baltimore’s new 2 cent tax on soda. [Read more stories about unemployment and the economy.]
Baltimore City passed the tax last year to help close a budget loophole. Baltimore is surely not the only city to come up with creative ways to raise revenue. And with national obesity on the rise and a concern, why not try to tax soda?
The answer is simple: anything seen as anti-business, which clearly this was, is a stupid thing to do in this economy. While most people think of Baltimore as home of the best crabs, The Ravens, The Wire (it’s not that bad, I swear!), and the cathedral of all baseball stadiums, Camden Yards, this move said to businesses near and far, “we don’t want you.”
For the average Joe, 2 cents more might mean spending more than a dollar on a soda. When every penny counts, literally, this is just too much. Do you really think the 7-11 is eating that tax out of the kindness of its heart? [Check out a roundup of political cartoons on Democrats.]
And just to prove my point even further, here is the good. My husband’s first paycheck of 2011 came in on Wednesday. He likes to joke that I am the public face of our little corporation as well as the CFO. This check was larger than it usually is. With every dollar accounted for, I was concerned. Did the 401k deduction get messed up or were we somehow dropped from an insurance plan?
Nope. It seems those tax cuts Congress passed last year actually did help those of us in the middle class. The difference in his check is less than $100, but this money is badly needed with gas and food prices soaring. This money will also help defer some of the costs of attending indoor play areas for my two-and-a-half year old son, who is climbing the walls of our condo in this freezing weather.
Democrats balked at the tax cuts at the time, saying the country couldn’t afford them. They were and are wrong. The country could not afford to not pass them! We would have been OK regardless, but there are plenty of people worse off than us, where this money is going to mean the difference between lunch and no lunch, between turning the heat on or freezing under multiple layers.
So while I was shown yet again why I can’t move back to my beloved Baltimore, I thank Congress for doing the right thing. Maybe I will use that extra money to go get a Sprite, but I will be buying it in Virginia.