Republican Gov. Larry Hogan’s sweeping tax-cut proposal for the state, announced earlier this month, faces an uncertain future in the Democrat-controlled legislature.
But the biggest piece of Hogan’s plan – the elimination of taxes on retirees to the tune of $4 billion over the next five years – has won immediate and widespread applause from retirees and their advocates, including the managers of the retirement communities that serve them.
“Anything (retirees) can get in terms of assistance is very important for retaining seniors in your community,” said Jeff Arnold, chief operating officer of the United Group, a New York-based company that operates more than two dozen retirement communities in 10 states, including the 150-unit Annapolis Gardens in Annapolis.
Retirees, he said, “add a lot of value to the community, and if they get these kind of tax cuts, that would be a big help.”
As Hogan knows, Maryland’s reputation as an unfriendly state for retirees, based on its taxes and cost of living, is well-entrenched – and well-publicized. Numerous lists ranking states on their desirability for retirees have placed Maryland near, sometimes even at, the bottom of the list.
In a 2018 study, for example, Kiplinger, which publishes business forecasts and personal financial advice, ranked the state 48th and the least tax-friendly for retirees.
Just last year, when Yahoo News studied ratings from three financial organizations, Maryland ended up in the bottom 10.
Also last year, the consumer financial services company Bankrate placed Maryland dead last as a state in which to retire. Like the others, Bankrate’s ranking was based largely on the state’s taxes on retirement earnings and its high cost of living.
The local affiliate of the AARP, the country’s best-known senior advocacy organization, is well aware of Maryland’s reputation for being financially unfriendly to retirees — especially to those on a fixed income — and supports tax cuts for seniors.
“It’s a balance for government, I understand that,” said Tammy Bresnahan, director of advocacy for AARP Maryland. “As people get older, they want resources and services – and they usually come from the tax base.
“But I also realize that if you look at the rankings, (Maryland) is not in a good place.”
In 2020, Bresnahan said, her organization polled its members and found that 60% agreed that maintaining savings should be an AARP priority.
“I’m a tenth-generation Marylander,” said Bresnahan, who just turned 62. “I don’t want to leave Maryland. But can I afford to stay in my Severna Park house on my state retirement?”
Bresnahan said she and her husband are considering a move to another state in their retirement and have already looked at neighboring Delaware.
Hogan has talked for years about eliminating taxes on retirement income, but his proposals have never made it through the General Assembly.
His current proposal would eliminate all income taxes for retirees earning less than $50,000 per year and dramatically reduce taxes for those earning $100,000 or less. His goal, he said, is to eliminate all state taxes on retirement income.
Those with retirement homes in Maryland say lower taxes for retirees would go a long way to making the state more attractive to people looking for a safe, affordable place to retire.
“I just look at my own 84-year-old mother,” said James Strom, senior director of marketing and admissions at Pickersgill Retirement Community in Towson. “She doesn’t have a lot of income and she’s still paying income tax. This is a very expensive state to live in.”
Many Maryland seniors – not to mention any seniors looking to move here in retirement – would second that.
“If you look at Maryland as a whole, I think this is a very real issue,” Strom said. “I probably know a dozen people that have moved out to Delaware just for the taxes alone.”
Delaware is generally ranked as one of the friendliest states for retirees.
While Strom says he favors cutting taxes for retirees, he says he worries about whether the state could sustain those lower taxes when its fiscal condition is not as rosy.
“I wouldn’t want to see, in a year or two, when people are used to having that extra money, for it to be taken away from them,” he said. “Then you’ve got another set of issues.”
Arnold, of the United Group, said his company is bullish on the mid-Atlantic area as a market for more retirement communities — and is especially keen on cities like Annapolis and Havre de Grace.
“That area has been on our radar,” Arnold said. “We’re looking to do more there, and if they had these kind of tax cuts and could communicate them to seniors, that would be a help.”