Maryland’s Marching Millionaires
Last year, Maryland politicians created a “millionaire” tax bracket raising the top income tax rate to 6.25% from 5.5% on taxable income over 1 million dollars. Maryland legislators were hoping the increase in the tax rate on the states’ highest income and wage earners would help to offset the states’ expanding deficit. As of April 15th, however, the State Comptroller’s Office reported that a total of 2,000 returns were received from those qualifying for the “millionaire” tax bracket, compared to the 3,000 returns that were received in 2008. Where are the missing high income residents? Have they moved to close-by tax friendlier states like Delaware, Virginia, and Pennsylvania? According to the Center on Budget and Policy Priorities, state officials become fearful that whenever tax increases are imposed, the change might have a negative impact on the states’ economy or “might lead upper-income families to leave the state.” In Maryland’s case, this fear might just be realized.
An Op- Ed piece in the Wall Street Journal on Tuesday, May 26th, commented on Maryland’s “millionaire tax” failure. The increase in marginal rates in the Maryland tax code demonstrates the pitfalls of attempting to raise taxes on citizens who are mobile, informed, and motivated.
Tweet