Fiscal Fact No. 112
There’s now little or no chance that the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. package being debated in Annapolis will include a tax cut for anyone. Lawmakers in both the Senate and House have raised every major tax, and both houses discarded the two smallish tax cuts that Governor O’Malley had offered. Those were a low-end income tax break worth about $150 for each couple and a cut in property taxes worth $90 for each $100,000 of home value.
The three biggest tax hikes will be general sales, personal income on high earners, and corporate income. The tables below compare current law in Maryland to its border states, and they also give the change in rate and rank that will occur according to each of the three alternative tax hikes: the governor’s, the Senate’s, and the House’s.
General Sales TaxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding.
: O’Malley, Senate or House?
All Agree on 6% Rate; Virginia Will Now Have Advantage in Every Type of Tax
|
State |
State-Local Sales Tax Rate and Regional Rank* |
|||||||
|
Current Law |
O’Malley |
Senate |
House |
|||||
|
Rate |
Rank |
Rate |
Rank |
Rate |
Rank |
Rate |
Rank |
|
|
Maryland |
5% |
3 |
6% |
2 |
6% |
2 |
6% |
2 |
|
Pennsylvania |
6.22% |
1 |
||||||
|
West Virginia |
6% |
2 |
||||||
|
Virginia |
5% |
3 |
||||||
|
Delaware |
zero |
5 |
||||||
|
* Under current law, Maryland ties for third highest with Virginia; under new law Maryland will tie for second highest rate with West Virginia. Source: State and local tax forms. |
Personal Income Taxes for Median Household: O’Malley, Senate or House?
No Change with Any Version—Maryland Still Most Expensive State in the Region for Taxpayers
|
State |
State-Local Tax Rate and Regional Rank |
|||||||
|
Current Law |
O’Malley |
Senate |
House |
|||||
|
Rate |
Rank |
Rate |
Rank |
Rate |
Rank |
Rate |
Rank |
|
|
Maryland |
7.48% |
1 |
7.48% |
1 |
7.48% |
1 |
7.48% |
1 |
|
Delaware |
6.82% |
2 |
||||||
|
West Virginia |
6.50% |
3 |
||||||
|
Virginia |
5.75% |
4 |
||||||
|
Pennsylvania |
4.35% |
5 |
||||||
|
* Maryland’s local income tax rate averages 2.73%, and most of the population pays over 3%. Maryland comptroller has county-by-county table: http://individuals.marylandtaxes.com/incometax/localtax.asp. Source: State and local tax forms. |
Personal Income Taxes for High Earners: O’Malley, Senate or House?
Regional Tax Disparity Widens Most with the Governor’s Version
|
State |
State-Local Tax Rate and Regional Rank |
|||||||
|
Current Law |
O’Malley |
Senate |
House |
|||||
|
Rate |
Rank |
Rate |
Rank |
Rate |
Rank |
Rate |
Rank |
|
|
Maryland |
7.48% |
1 |
9.48% |
1 |
8.23% |
1 |
8.48% |
1 |
|
Delaware |
6.82% |
2 |
||||||
|
West Virginia |
6.50% |
3 |
||||||
|
Virginia |
5.75% |
4 |
||||||
|
Pennsylvania |
4.35% |
5 |
||||||
|
Maryland’s local income tax rate averages 2.73%, and most of the population pays over 3%. Maryland comptroller has county-by-county table: http://individuals.marylandtaxes.com/incometax/localtax.asp. Source: State and local tax forms; and Washington Post. |
Corporate Income Taxes: O’Malley, Senate or House?
Still Not as High as Pennsylvania, but Tax Disparity Between Maryland and Virginia Widens
|
State |
State Tax Rate and Regional Rank |
|||||||
|
Current Law |
O’Malley |
Senate |
House |
|||||
|
Rate |
Rank |
Rate |
Rank |
Rate |
Rank |
Rate |
Rank |
|
|
Maryland |
7% |
4 |
8% |
4 |
8% |
4 |
8.75% |
3 |
|
Pennsylvania |
9.99% |
1 |
||||||
|
West Virginia |
9% |
3 |
||||||
|
Delaware |
8.7% |
2 |
||||||
|
Virginia |
6% |
5 |
||||||
|
Source: State and local tax forms; and Washington Post. |