Maryland Business

By: jackie.sauter

In case you missed it, an Op-Ed in the Wall Street Journal yesterday berated the state for “fleecing the wealthy.”

It argues that by raising the top marginal income-tax rate to 6.25% in 2008, Maryland pushed its highest earners to move out of state (or, more likely, to change their residencies to their second homes in tax-friendlier states.)

Here are the hard numbers:

• In 2008, about 3,000 million-dollar tax returns were filed
• In 2009, that number dropped to 2,000
• Because Baltimore and Bethesda, among other cities, impose additional income taxes, the WSJ notes “the state-local tax rate can go as high as 9.45%“
• In 2008, MD projected an extra $106 million in revenue from the increase; because of the drop in returns, the wealthy actually paid $100 million less in taxes in 2009 than in 2008

Before you cry foul, the WSJ does concede that the majority of the loss in filings “no doubt” results from the recession. Regardless, some number of rich filers did leave the free state.

Moreover, the op-ed contends:

This is one reason that depending on the rich to finance government is so ill-advised: Progressive tax rates create mountains of cash during good times that vanish during recessions.