Baltimore Sun Takes Cheap Shot at Montgomery County

Maryland collects more income tax from Montgomery County residents than it does from Baltimore City and Baltimore County combined, even though Montgomery has half a million fewer people. So it must be galling for Montgomery residents to read the Baltimore Sun’s insulting dismissal of Montgomery’s tax worries. Here’s what the Sun wrote:

The same Senate committee responded to complaints from Montgomery County lawmakers and capped the income tax on high-end earners at 5.5 percent instead of the 6.5 percent Mr. O’Malley proposed. They also largely eliminated any tax reductions for low- and middle-income workers. Considering how regressive the rest of the tax package is, that’s outrageous. Legislators say they want a more progressive tax system, but apparently they also fear the wrath of the state’s rich, many of whom live in Montgomery County.

What O’Malley wanted from Montgomery wasn’t 6.5% but 9.7% because unlike any other state, Maryland collects huge county income taxes. Here’s a table of local rates from the comptroller’s office:

And here’s a table comparing Maryland’s average county income tax rate with the few other states that even permit them.

Maryland has the Highest Average Local Income Tax Rate in the Country

While making snide remarks about rich tax-avoiders in Montgomery County, the Sun should at least be honest enough to point out that everyone in Maryland (except in Worcester County) is already out-paying everyone in the border states. And in the three highest-taxed counties — Montgomery, Prince George’s and Howard — the current 7.95% rate makes Maryland a tax pariah compared to Pennsylvania’s 4.35%, Virginia’s 5.75%, West Virginia’s 6.5%, and Delaware’s 6.82% (and Delaware has no sales tax at all!). Even the Senate version worsens that regional disparity, bumping Marylanders up to 8.7%, but the Sun prefers O’Malley’s target of 9.7% which would be the highest rate in the country on income between $200,000 and $335,000.

More comparisons of Maryland’s tax system with the other states in region available in a recent report. In short, Maryland is headed for a New Jersey style tax code, but without the economic advantage (proximity to New York City) that keeps many New Jersey businesses from fleeing.