A ‘D’ for the Professor: Maryland\’s Taxing Situation

During Maryland’s last gubernatorial election, Republican Ellen R. Sauerbrey promised deep tax cuts. She pointed to the 30 percent tax cut in New Jersey as a model. The victorious Parris N. Glendening seemed to get the message. After he took office, he called for a five percent to ten percent income-tax cut: a wise economic and political – move.1

As readers of this journal are aware, Maryland has some of the highest taxation in America. In 1992, its individual income tax was, at $874 per capita, the third-highest in the U.S. (The national average was $452.)2 Though overall property taxes are lower than in many states, this does not alter the fact that in 1991 Maryland’s combined rate of all state and local taxation was $2,284 per capita, 9.6 percent higher than the U.S. average of $2,083. This gave Maryland the unenviable distinction of being the ninth-highest taxed state in the country. The corresponding figures for Maryland’s immediate competitor states were: Delaware, $2,081 per capita (18th); Virginia, $1,962 (22nd); Pennsylvania, $1,888 (29th); North Carolina, $1,673 (38th); and West Virginia, $1,628 (41st).3

Money magazine recently ranked Maryland as a “tax hell.”4 Individual income tax rates range from 2.0 percent to 5.0 percent with the highest rate kicking in at $3,000 worth of taxable income.5 Local “piggyback” income taxes are in effect in every county and in Baltimore City. The state corporate tax rate is 7.0 percent, the state sales tax 5.0 percent, and the state gasoline tax is 23.5

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