Maryland’s Business Tax Climate Makes Biggest One-Year Decline; TF in Annapolis This Wednesday

This Wednesday, Maryland Governor Martin O’Malley will go back to Annapolis to present a final list of proposed budget cuts to the State Board of Public Works. In the midst of an economy in decline that has led to these revenue shortfalls, the Tax Foundation and the Maryland Public Policy Institute will be holding a press conference in Annapolis announcing that Maryland has made the largest decline in our State Business Tax Climate Index, sliding from 24th in 2008 to 45th in 2009 in our annual ranking of the “business-friendliness” of each states’ tax systems. Here are the details:

• What: Press Conference – Re: Maryland’s Tax Climate – 2009 State Business Tax Climate Index
• Who: Tax Foundation and Maryland Public Policy Institute
• Where: Lawyer’s Mall – Maryland State House – Annapolis, MD
• When: 9:00 AM – Wednesday, October 15, 2008
• Interview Availability: Immediately Following the Press Conference
• Tax Foundation Contact: Matt Moon, Manager of Media Relations, W: (202) 464-5102, moon@taxfoundation.org
• Maryland Public Policy Institute Contact: Christopher Summers, President, W: (240) 686-3510, csummers@mdpolicy.org

Tax Foundation Staff Economist Josh Barro is the author of the study, which ranks states based on the taxes that matter most to businesses and business investment: corporate tax, individual income tax, sales tax, unemployment insurance tax and property tax. States achieve high scores by having low rates, broad tax bases and simple rules.

Maryland’s drop from 24th to 45th out of 50 states on the Index is attributable to an increase in most of the state’s major taxes for FY 2009. They raised the corporate income tax rate to 8.25% from 7%, the sales tax rate to 6% from 5%, and the cigarette excise tax to $2.00 from $1.00 per pack. Maryland also created four new income tax brackets, raising taxes on filers earning more than $150,000 per year. The state’s top personal income tax rate is now 6.25% (up from 4.75%); that’s on top of a weighted average local option rate of 2.98%. Maryland now has by far the worst personal income tax in the country, with a significantly lower score than second-place California.

Ed C of the Howard County Maryland Blog also noticed that Maryland was “sinking like a rock,” and Richard Falknor of the Blue Ridge Forum Blog bemoans that Maryland might be “creating opportunities for Delaware, Virginia and Pennsylvania.”

Find the 2009 State Business Tax Climate Index here.

Tax Foundation coverage of Maryland’s tax changes:

• Maryland Revenue Falls Short Despite (or Because of?) Huge Tax Hikes, by Joseph Henchman, September 16, 2008
• Is Maryland a High-Tax State?, by Joseph Henchman, August 20, 2008
• Three Ways to Look at the Maryland Slots Debate, by Alicia Hansen, August 13, 2008
• Maryland’s County Income Taxes, by Joseph Henchman, July 16, 2008
• Maryland Puts Final Touch on Historic Tax Hike, by TF Staff, April 9, 2008
• Maryland Legislature: All Tax Preparers Must Be Licensed, by Gerald Prante, April 9, 2008
• MD Computer Services Tax Repealed; GA Tax Plans Die, by Joseph Henchman, April 8, 2008
• Maryland Computer Services Tax is Last Straw for Some, by Joseph Henchman, March 17, 2008
• Momentum Builds to Repeal Maryland Computer Services Tax, by Joseph Henchman, March 14, 2008
• Will Baltimore Bet on Gambling to Solve Property Tax Problems?, by Alicia Hansen, January 23, 2008
• Maryland Comptroller Supports Computer Services Tax Repeal, by Joseph Henchman, January 22, 2008
• Maryland Tax Increases Begin to Hurt, by Joseph Henchman, January 14, 2008
• Challenge to Maryland Tax Increases Dismissed, by Joseph Henchman, January 11, 2008
• Attention Maryland Smokers: Buy Your Cigarettes Before Midnight, by Gerald Prante and Joseph Henchman, December 31, 2007
• Maryland Covertly Singles Out Computer Services For New Tax, by Joseph Henchman, December 17, 2007
• Maryland’s New Tax Triple Crown, by William Ahern, November 13, 2007