Tarry for the Nonce

May 26, 2009

Drive Them South

Filed under: Uncategorized — lmwalker @ 10:12 pm

Maryland couldn’t balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy. Politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25%. And because cities such as Baltimore and Bethesda also impose income taxes, the state-local tax rate can go as high as 9.45%. Governor Martin O’Malley, a dedicated class warrior, declared that these richest 0.3% of filers were “willing and able to pay their fair share.” The Baltimore Sun predicted the rich would “grin and bear it.”

One year later, nobody’s grinning. One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller’s office concedes is a “substantial decline.” On those missing returns, the government collects 6.25% of nothing.

Boyoboy, did I pick a gem of a home state.

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4 Comments »

  1. Of course, statements like “grin and bear it” aren’t going to endear a newspaper to its readers, but there are several confounding factors here.  As noted in the article, the recession probably played a huge role.  If those 2000 who stayed paid the same amount that they had the previous year, would there still be a drop in revenue?  (This seems like a simple calculation that’s conspicuously absent.  BTW, why isn’t the original tax percentage, or a comparison with other states, mentioned?)  Could people be leaving for reasons like this?  In an article pushing the theory that higher taxes compelled millionaires to leave, why is there not one interview of someone who left for that reason?

    Of course, none of this means that creating the millionaire tax bracket was a good idea; unfortunately, no one considers these side effects, and raising taxes on the wealthy seems to be the most politically viable option these days.

    Comment by Joshua Green — May 27, 2009 @ 12:25 am

  2. It’s also a possibility that upper income earners simply had their income drop, especially if it was tied into stocks.

    I frankly can’t imagine someone trying to sell a home in this market and relocate for a few percentage points.

    Comment by Howard The Fiscal Conservative — May 31, 2009 @ 2:29 pm

  3. I think it’s far more likely that people who own more than two homes maintain their residency in the most wealth-friendly state.

    Comment by lmwalker — June 1, 2009 @ 3:19 pm

  4. Assuming that Maryland doesn’t tax out of state residents for income earned in the state.

    Better a progressive tax than one that hits lower income earners hardest.

    Comment by Howard — June 30, 2009 @ 7:02 pm


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