Maryland's Tax Competitiveness At Risk, Warns Tax Foundation

by Carla Johnson, Investors Offshore.com, London

30 October 2007

The Tax Foundation last week spoke out over the risks posed to Maryland's competitiveness in the national arena if Governor O'Malley's proposed tax changes are put in place.

The Tax Foundation is a non-profit, non-partisan tax policy research group based in Washington which studies the economics of taxation at the federal, state and local levels.

Speaking out about the recent tax proposals by Governor O'Malley, the Foundation observed that:

"Governor O'Malley's proposal increases five taxes, decreases one and promotes a state-run gambling operation in order to close what he calls a $1.7 billion structural deficit. The governor has been quick to point out that the revenue is necessary to close budget holes and increase spending on transportation, education and health care."

It continued:

"Lost in the rush to increase taxes is the crushing impact these tax increases will have on Maryland's competitiveness."

The Tax Foundation suggested last week that Maryland needs to be mindful of its competitiveness, because investment capital is more mobile now than ever before.

"While global outsourcing gets the headlines, states must remain wary of their standing in relation to other states, since the Department of Labor reports most job relocations still occur from one state to another, rather than to foreign destinations," it observed.

According to a recent study conducted by the Tax Foundation, Marylanders currently pay 10.8% of their income in state and local taxes. This is around the national average of 11.0%, and ranks Maryland 23rd overall nationally.

If Governor O'Malley's plan had been in effect for 2007, however, Marylanders would have paid 11.5% of their income in state and local taxes, ranking 11th highest nationally, the Foundation explained.

"Maryland would have jumped over West Virginia and competed with New Jersey for the highest-taxed state in the region. In fact, Maryland would only be a few hundredths of a percentage point behind New Jersey, meaning it would be knocking on the door of the top ten," it revealed.

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