Watch Governor O’Malley Raise Maryland Taxes

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I can’t remember a raising of taxes in my recent adult memory, which has spanned about half a decade, so watching what comes of Maryland Governor O’Malley’s attempt to raise Maryland taxes is going to be entertaining for me on a number of levels. First, it’ll affect me in an appreciable way since I live in Maryland so I can analyze it. Second, since I’m more engaged in the political process, it’ll be interesting to see what sort of political fall out will come of this. Third, it’s just fun when something this basic, taxes, gets played with in the political arena.

While the details are still trickling out… here’s what has been brought up in a bunch of news sources…

Progressive Tax

Currently Maryland has a flat tax of 4.75%, thanks to a 1997 law, but O’Malley has been talking about making the tax progressive (meaning it would have brackets, like the federal income tax). It’s unclear who would have to pay more in the new system, since the details haven’t been released, but anywhere from $150k to $200k household income would be the turning point. The progressive tax wouldn’t be a real killer for those with high incomes anyway (even if the nominal value is larger). Also, this is a bad thing for small businesses that pass through earnings to their owners, like mine, and might make some move to another state. (I’ve been considering it)

Sales Tax Increase from 5% to 6%

O’Malley is coupling a sales tax increase with a property tax decease (not yet explained) which shifts a the tax burden a little bit. Since non-Maryland residents spend money in Maryland and non-Maryland residents don’t pay property taxes, by decreasing property tax and increasing sales tax, you’re pushing some of the burden onto visitors (strictly speaking in theory). Now, this also has the negative effect of shifting the burden from the affluent (more expensive houses) onto the less affluent (less expensive houses). This shift from affluent to less affluent is lessened by the fact that Maryland doesn’t tax food, so it’s not as bad as some people are screaming.

Also, O’Malley wanted to extend the sales tax to include a bunch of other things like health club memberships, tanning salons, spa services, and real estate management services. Clearly those businesses are pissed… plus they’re going to be taxed more!

Property Tax Decrease

Cutting 3 cents per $100 in assessed value over the course of three years, or .03% over three years. My honest opinion? A waste of time. I’d save around $50 a year, big whoopee.

Raising Corporate Tax

O’Malley is looking to increase the tax from 7% to 8%, which is estimated to dump around 2,000 jobs in the area. That’s what happens when you immediately increases expenses… jobs get cut in the short term.

Excise and Excise-ish Taxes

Double the cigarette tax and increase the car titling tax are two more pieces of the puzzle.

Exciting stuff!

{ 10 comments, please add your thoughts now! }

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10 Responses to “Watch Governor O’Malley Raise Maryland Taxes”

  1. mapgirl says:

    I don’t care since I don’t live in Charm City anymore, but O’Malley is dreamy.

    I wonder what Punny Money and CleverDude will say since they are MD residents as well. This could be good for most middle income people and homeowners. MD is so expensive. I don’t mind higher sales tax for consumption, that’s always seemed reasonable, but regressive. (I guess it’s ok since they don’t tax food, but why do they tax clothes? We all need them since we’d be charged with indecent exposure otherwise….)

    In the end, one reason why I chose VA over MD was because I’d pay less in income taxes by living there. (And the property values were cheaper, and the property taxes were cheaper, and the commute shorter, etc…)

  2. marylandterps says:

    I moved to FL last year, having lived in MO County MD & Alex VA (both outside DC), & the big reasons were 1)taxes & housing prices & 2)sunny, warm weather. Both VA & MD have had many “Stealth” tax increases the past couple years. Fees were increased for many services. My VA property taxes also increased 33% & then 35% in successive years. How can anyone afford that? Gov. Warner also increased taxes $1.5 billion dollars during his term. Cig taxes in both states increased in 2003. I’m helping your amnesia…there have been many tax increases the past few years. I don’t consider any of them “fun” or “exciting,” as they take my hard earned money & waste them on more useless government programs.

  3. jim says:

    With respect to my amnesia, I moved to Maryland midway through 2003… so I wasn’t around for either of those increases.

  4. Carl says:

    Having lived in MD since 1997 I can’t believe I never realized there was no tax on food (I mean I saw it sometimes when I glanced at my grocery receipts, but it never hit me)

    But that’s only grocery food right? Like unprepared stuff you get at Giant? Because there’s definitely tax fast food and canned good right?

  5. Kirk Kinder says:

    What bothers me most about this situation is the politicians, especially O’Malley, fail to look at any spending cuts. They identified around $30 Million in spending cuts, but then they start to claim that if they don’t raise taxes then they will have to cut money for orphans or the elderly. They pinpoint items that they know folks would never allow to be cut.

    There are plenty of other programs and projects that could be reduced or delayed, but the state ignores those possible cuts. When times get tough for families, they have to sit around the kitchen table to find spending cuts. When times are tough for the government, they pass the burden onto its citizens.

  6. Steve says:

    I live in Maryland also. Another component of his budget balancing proposal is slot machine revenue, which less than 5 years ago he derided as “morally bankrupt”. Anyway, here is a link to a Sun article that details the proposed tax brackets and rates.

    Baltimore Sun Article

  7. Dave says:

    You mentioned that the tax increases may contribute to small businesses locating outside of Maryland. The state also recently instituted a “living wage” program, which forces businesses to pay wages significantly higher than the federal minimum wage. This is yet another signal from the state of Maryland that business owners are encouraged to locate elsewhere.

  8. Simeon says:

    Hopefully O’Malley won’t ge re-elected. Anyone that can give us three kinds of tax raises at once should not be Govenor!

  9. i sinhh says:

    Hopefully he won”t get re-elected . and the all should get a pay cut and make less if the state is in criss. people r suffering enough.

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