With Forbes’ recent release of the richest 400 Americans list, it’s a good time to take a look at whether Maryland’s tax policies are, as conservatives often claim, repellants for wealthy people.
Maryland is home to eight of the 400 richest, or 2 percent (this is in line with the state population, which makes up 1.87 percent of the nation’s total). So, for the 1 percent of the 1 percent, at least, tax avoidance by emigration appears to be nonexistent.
There are other data that suggest different, though. Between 2000 and 2010, Maryland lost the eighth-most personal income in the nation, with a reduction of $5.5 billion, according to the right-leaning Tax Foundation. Texas, for comparison, which has been touted this week in the Free State by a very-early-presidential-campaigning Gov. Rick Perry, ranked third in income gained, with $17.6 billion.
These numbers are compelling, but they do little to explain the critical question of why income is shifting from some states to other states. For that, the Maryland Budget and Tax Policy Institute, which leans left, has offered reasons other than taxes — such as lower housing costs and more favorable weather — as the causes for the changes.
Let’s take a look at the raw numbers to see how Maryland stacks up.
• Maryland’s personal income tax rate tops out at 5.75 percent, well above the seven states with no income tax at all, but nowhere near California’s 12.3 percent, Hawaii’s 11 percent, Oregon’s 10 percent or Iowa’s, Vermont’s and New York’s 9 percent.
• Maryland ranks fifth, according to the Tax Foundation, in state and local tax burden per capita, at $5,234 (Mississippi is last, at $2,625 per capita).
• Maryland ranks 12th in tax burden as a percentage of income, at 10.2 percent (Alaska is last, with 7 percent).
These data provide some insight into the state’s tax climate for individuals, but many other factors go into determining where one wants to live, including school quality, public safety and transportation.
For at least one of those, Maryland is quite competitive. On schools, according to Education Week, Maryland is tops in the country for policy and performance.
When it comes to public safety, Maryland doesn’t fare nearly as well — according to recent Census data, the Free State ranked in the top 10 per capita for violent crimes, with more than 600 per 100,000 people.
In another critical measure, Maryland ranked in the top 20 healthiest states in 2012, in part due to a low percentage of children in poverty, a low prevalence of smoking and ready availability of primary care physicians.
The point here, ultimately, is that while pointing fingers at taxes as the cause of financial problems makes for good political talking points, decisions about one’s residence are highly complex. The talking heads who like to make scores for their ideology on easy targets like taxes do a disservice to the public dialogue on a much more nuanced landscape.