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1 William Ahern, Maryland Flouts Regional Tax Competition with Historic Tax Hike 1 (2008)

handle is hein.taxfoundation/ffbcexz0001 and id is 1 raw text is: FOUNDATION Maryland Flouts Regional Tax Competition with Historic Tax Hike Fiscal Fact No. 124 by William Ahern April 9, 2008 Governor O'Malley has now put the icing on his first term's biggest cake, a historic tax hike. We see no record of any state having raised all three of its major tax rates in one fell swoop, but Maryland has done just that. The icing is a so-called millionaire's tax, a 6.25 percent rate on income over $1 million, which on top of the local income tax will bring the rate on most Maryland income over $1 million to about 9.45 percent.' All the other tax hikes on personal income, general sales and corporate income were set in law during the fall's special session. But what about people in the middle-income ranges, say from $50,000 to $100,000? With all the talk about socking it to millionaires, many people have overlooked the fact that middle-income taxpayers are still more heavily taxed in Maryland than in any other state in the region. In fact, there are now only five states in the U.S.-California, Hawaii, Iowa, Maine and Oregon-where a couple with $75,000 in taxable income might be in a higher bracket than an average Maryland couple.2 The Maryland rate for middle-income workers is about 7.5 percent (4.75% state plus 2.73% local), well above the rate paid in any neighboring state (see Table 1).