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ROCKVILLE, MD (Nov. 2, 2022) — Maryland has again earned a spot among the nation’s worst states for business in the Tax Foundation’s annual State Business Tax Climate Index. Our state’s overall rank dropped two spots, from 44 to 46, in the last year as other states have made moves to ease their tax burdens on residents and businesses.
 

The rankings take five different tax rates into account to create the rankings. Maryland’s individual income taxes, property taxes, and unemployment insurance taxes each rank near the bottom nationally, piling pain atop employers and employees alike.
 

“No matter how you look at it, Maryland’s government has made working, buying property to do business, and operating a business in the state extremely expensive compared to other states like Florida, Virginia, Utah, or North Carolina,” said Maryland Public Policy Institute President and CEO Christopher Summers. “The result is a stagnant economy that both residents and businesses often flee from.”
 

CNBC reported on Oct. 1 that Maryland is 7th least popular state in the nation to move to in 2022.
 

Major businesses in the region, meanwhile, have consistently chosen to locate in Virginia rather than Maryland. Amazon, Boeing, Raytheon, and a slew of tech companies have recently announced either new corporate headquarters or new offices in Virginia, for example.
 

Virginia ranks 26 in the Tax Foundation index.
 

In his book titled How Money Walks, economist Travis Brown found, according to Census Bureau and IRS data, that Maryland’s high taxes push billions in wealth primarily to Florida, North Carolina, Pennsylvania, and South Carolina.
 

These trends have left even wealthy counties like Montgomery County falling behind. A 2021 study commissioned by the county concluded that “The impact of Montgomery County losing its competitive position is substantial, and significant policy interventions are necessary to reverse that trend.” 
 

“If nothing changes, and Maryland’s political leaders continue on their habitual path of taxing local workers and businesses at such extreme levels, we will continue to be a state left behind,” Summers said. “Though California undoubtedly earns the most headlines in terms of companies escaping their onerous business climate, the fact that our mediocre economy flies under the radar should be no comfort to Marylanders. Policy changes that prioritize economic improvement must be prioritized in Annapolis.”
 

The Maryland Public Policy Institute has consistently recommended proven reforms like reducing the state’s corporate income tax back to 7%, where it was prior to 2007, and exempting at least $20,000 of pass-through income from income taxes.

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The Maryland Public Policy Institute is a nonpartisan public policy research and education organization that focuses on state policy issues. The Institute’s mission is to formulate and promote public policies at all levels of government based on principles of free enterprise, limited government, and civil society. Learn more at mdpolicy.org.