The Wall Street Journal editorial board — cockeyed guardians of wealth and privilege — argued recently that Gov. Wes Moore’s latest budget was anti-growth because he wants to raise taxes on the wealthiest Marylanders.
Points for calling it “Californication.”
Moore responded, saying those who have “done exceptionally well financially” should pitch in to prevent firefighter layoffs and public schools falling behind.
Oh no, he added, the wealthiest 1% won’t pick up and move when their taxes go up just an itsy-bitsy bit.
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And so it goes. Is Maryland a “tax hell” that chases people and opportunities away? This question has defined the conversation on taxes and spending in the state for decades.
It’s complicated — over the heads of most of us. You must be conversant in math, demographics, politics and economics — whatever that is.
That’s why we look to the smartest, the ones really able to study the situation to make nuanced judgments.
“Absolutely no way,” said state Sen. Stephen Hershey, a chief of the nyetnik Republicans in Annapolis.
Eat the rich, said Senate President Bill Ferguson, a poobah of the yes-please Democrats. Actually, he didn’t say that.
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“This is going to be a very dynamic session where we are really trying to lead with our values,” he said.
Potayto, potahto.
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All sorts of smart people think about this question.
Do rich people get up and leave when a state raises taxes on them?
Yes, they do, wrote Andrey Yushkov, a tax policy analyst for the right-leaning Tax Foundation.
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Yeah, but Miles Trinidad and Nick Johnson of the left-leaning Institute on Taxation Economic Policy argued, Mr. and Mrs. Moneybuckets have gotten a sweet deal in Maryland, paying 9% in state and local taxes, while the poor pay 9.6% and the middle class 11.3%.
Long-dead Money magazine might have been the first to paste Maryland with the tax hell label. About 10 years ago, it became a successful political strategy.
During Democrat Martin O’Malley’s years as governor, he was trying to keep state and local government from going under during the Great Recession.
He increased income taxes to their current levels and cut the budget to address the structural deficit (fancy-pants speak for spending more than you make over a long time).
“Asking our fellow citizens to do more will not be popular,” O’Malley said in his 2012 State of the State address. “But without anger, fear, or meanness, let’s ask one another: How much less do we think would be good for our children’s future?”
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It worked until it didn’t.
O’Malley won reelection in 2010, but in 2014 his lieutenant governor, Anthony Brown, got clobbered by Republican Larry Hogan and his tax-hell siren song.
“High taxes, over-regulation, and an anti-business attitude are clearly the cause of our economic problems,” Gov. Hogan said in the first of eight addresses to the General Assembly.
Were they? Or was it the lingering effects of the greatest economic downturn in 80 years?
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Moore faces similar choices. Maryland’s economy stagnated during the COVID pandemic, but federal investment under President Joe Biden helped it recover.
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Now that money is gone, the economy is meh, the Democratic governor had to plug a $3 billion budget hole and vanishing federal aid under President Donald Trump means this ain’t over.
Moore wants to raise income taxes on top earners by .75%, charge a fee on deliveries in our Amazon-addicted lives, hike capital gains taxes — quelle horreur, gasped the WSJ pearl-clutchers — and keep people who saved on federal taxes by itemizing deductions from using those savings on their state returns.
The Maryland Board of Revenue Estimates, the official judge of how much this will sting, said its “microsimulation” shows 60% of taxpayers will get a tax cut, 20% will see tax bills stay steady and 20% will see them rise. Losing itemized deductions will hurt middle-income taxpayers, too, more than Moore is eager to discuss.
It neglected to mention that Trump screwed middle-class Maryland homeowners out of this break in 2017 by eliminating the federal deduction for state and local taxes.
Moore unfortunately echoed his Democrat predecessor.
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“As someone who will be affected by this change, I am OK with paying a little more if it means we don’t have to lay off firefighters or police officers,” he said. “If it means we can have the best public schools in America. If it means we can have the resources to grow our economy.”
That and his presidential ambitions made him an easy target for The Journal’s tax hell crusaders.
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People are willing to pay a fair share. The right question is, what’s fair?
Most analyses start from the premise that any taxation is bad.
Maryland is 13th on WalletHub’s ranking of states by total tax burden. The difference between Maryland and Virginia (21) is .75 of a percentage point.
It’s a weak comparison. WalletHub looks at property, income and sales taxes, leaving out fees, creative funding and the value of services paid for by taxes.
You can move to Delaware (45) if you want. Lots of Marylanders do.
Unless you can afford the $825,000 median-priced home close to the beach in Rehoboth, though, you’ll land in Georgetown for half a million less, and where — trust me on this — nothing happens all the time.
That’s OK if you’re a retiree. This is not new, but it has increased.
The Federal Reserve just released a report that found 91,000 people left the Baltimore-Washington corridor in 2020-22 for Delaware and North Carolina (32). Most were post-pandemic workforce casualties — forced retirees.
In the past, fleeing Marylanders were replaced by bright people taking new jobs in federal government, biotech, medicine and higher ed. They considered the state a good bargain.
Trump is changing that equation.
By firing probationary workers, bullying civil servants, shutting agencies and killing contracts and research grants, Trump will chase off those new taxpayers.
Maryland is not a tax hell.
Unless something blunts the Trump storm, though, we will find ourselves living in tax purgatory.
This column has been updated to correctly state that Martin O’Malley was reelected governor in 2010 and Larry Hogan was elected to succeed him four years later.
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