Hark to an exiled son’s appeal.
The past four years have been a long lament for Marylanders fleeing the state’s oppressive tax burden for greener pastures. According to Rich States, Poor States, over 95,000 residents have left never to return. These are 95,000 taxpayers no longer helping fill the state’s coffers. In fact, if you do a quick extrapolation using the state’s per capita tax collections, the mass exodus has cost Maryland $218 million per year. These families are fleeing to the low tax havens such as Texas and Florida.
Why do we mention this? Very simply because Maryland has tried and failed to tax its way out of budget deficits before, and this only exacerbates the real problem that people are leaving the state precisely because of the tax burden. Residents pay over $5,200 per year in state and local taxes, roughly ten percent of household income. When you pile federal taxes on top of that burden it becomes an unsustainable situation.
Despite the economic and migration realities Annapolis showed no signs of empathizing with the common Marylander. Earlier this week, Governor O’Malley’s tax hike package fell apart when the clock struck midnight on Monday. Rather than accept the good fortune, the Governor and legislative leaders took turns blaming one another for not raising taxes on their constituents.
Early indications are that a tax deal will be reached without public input and only then with the General Assembly reconvene in a special session. All manners of tax increases will be placed back on the table, income tax increases, property tax shifts, gas tax hikes, tobacco tax increases, etc. Although, of note, one tax will not be debated and that is the “flush tax” as the Assembly managed to double the fee to $60 before adjourning on Monday.
The details of the final tax package become less important in the grand scheme of things. The Governor and General Assembly have had numerous opportunities to close the $512 million budget gap without raising taxes. Last fall, the Assembly was well aware of a growing budget hole. Rather than seek relative austerity, the state decided to increase spending. Furthermore, the Governor pitched hiking the gas tax knowing full well most of the current shortfall, such that it exists, is due to his efforts backed by the Assembly to transfer over $1 billion out of the Transportation Trust into the General Fund.
I can go on and on, but the law of diminishing returns kicks in at a certain point. Annapolis appears to have a single-minded purpose to raise taxes on its citizens. If this is indeed the case, more and more Maryland residents and businesses will flee and the politicians will be left to wonder what happened to Maryland, My Maryland.