By: Nicholas Sohr

The New York Times had an interesting story on Friday about an IRS report on tax return filing trends in 2008.

I know, I know. “Tax return filing trends can be interesting?” you’re asking yourself. Yep. That’s right. They can be. Now buckle up.

If you haven’t stopped reading already, here’s why: The data shows that in 2008, the country was hemorrhaging millionaires.

In the spring of 2008, when those tax returns were being filed, Maryland passed its controversial “millionaire’s tax” – the 6.25 percent tax bracket for those of us lucky enough to pull in more than $1 million a year. (That “us” in the last sentence was less inclusive of certain reporters/bloggers than you may think.)

The new tax rate was supposed to bring in more than $100 million extra to the state’s coffers, but millionaires ended up paying about $100 million less in taxes for 2008 than they did the year before. Some 2,000 Marylanders claimed at least $1 million in income, well down from 2007, when 3,000 residents fit that bill.

The lofty tax bracket has been roundly criticized by the business community and conservative lawmakers, who decried it as an anti-business move (many small businesses file individual income taxes) that chased big earners across the borders into Pennsylvania or Virginia. It was allowed to expire this year.

But, was it really so bad for the millionaire crowd as some would have you believe? Was the difference in millionaire tax filers between 2007 and 2008 all due to the new tax bracket? Probably not.

As the IRS report showed, a big chunk of the country’s big earners got crushed (read: their incomes slipped below $1 million) as the economy tanked.

The Wall Street Journal reported this spring, as an extension of the tax was being considered, that one in eight millionaire filers in 2008 didn’t file a Maryland tax return in 2009. As the paper noted:

Some died, but the others presumably changed their state of residence. (Hint to the class warfare crowd: A lot of rich people have two homes.)

The tax wasn’t included in Gov. Martin O’Malley’s budget proposal – the governor made a point to note its absence – and with legislative leaders on both sides of the aisle committed to avoiding raising taxes, or even appearing to be doing so, the millionaire’s tax extension didn’t stand a chance.

The lesson seems to be that the millionaire tax didn’t decimate the ranks of well-heeled Marylanders, it simply piled on to the destruction being wrought by the recession. I’d bet $1 million (or $999,999 to keep myself out of any potentially more expensive tax brackets) we don’t see a proposal like this again, even as lawmakers look for ways to bridge a structural budget deficit in coming years.