The Maryland Public Policy Institute
Governor O’Malley thinks Marylanders don’t pay enough in taxes. In fact, he recently touted out state’s “low” tax rates. I doubt many readers of this blog think you are undertaxed, but, frankly, our opinions don’t really count. The governor and legislators have made up their minds and we’re going to be taxed more. When these tax hikes take effect, by almost any measure Maryland will have some of the highest taxes in the nation.
The idea that Marylanders don’t pay enough in taxes is a fairly ridiculous notion. Just go to the Tax Foundation’s website and check out its section on Maryland. A few quotes from that page:
Maryland's 2008 state-level individual income tax collections were $1,229 per person, which ranked 9th highest nationally.
Maryland ranks 42nd in the Tax Foundation's State Business Tax Climate Index.
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2012, Maryland taxpayers work until April 23 (ranked 5th nationally) to pay their total tax bill. [That is, only 4 states have later Tax Freedom Days than Maryland.]
The best the Tax Foundation can say about Maryland’s tax burden is this: “Maryland's 2009 state and local tax burden of 10.0% of income is slightly above the national average of 9.8%.”
Is having a tax burden that’s slightly above the national average a low tax burden? To Governor O’Malley, it is. Whether you think he’s right or not, this special session will significantly change this tax burden. As the Maryland Reporter sums up:
… the new tax rates will raise about $250 million for the next fiscal year, retroactive to Jan. 1.
Single taxpayers having taxable income from $150,000 to $500,000 and joint taxpayers with incomes from $225,000 to $500,000 will see the biggest rate hike, 0.5% — figures 10% higher than their current rates. Exemptions in those brackets will also be cut, which will provide $31 million in additional revenues to the counties as well.
Combining the new rates with the top local piggy back rates of 3.2% would bring Maryland top rates to almost 9%, putting it among the top 10 states for its state and local income tax rates.
And what will these tax increases pay for? As I’ve written about this week, these taxes will fund scholarships that legislators hand out as political patronage and corporate welfare tax credits. They will allow state workers to keep from paying slightly more for their health insurance benefits. They will ensure the state retains 500 positions.
Are these tax increases really worth it?