Congratulations Maryland! According to a story in today's Washington Post, the Free State leads the country in Millionaires. Approximately 7.22% of Marylander households are part of the exclusive millionaires club.
There are about 2.4 million households in Maryland so that translates into roughly 173,000 millionaire households. I'm glad this information was released, because the state is currently considering, and Governor O'Malley appears to be supporting, a series of proposals to increase any number of taxes - the gas tax, the flush tax, car titling and registration fees, and the auto emissions testing fee. Indeed, the one tax that O'Malley does not seem interested in increasing is the income tax.
A few months ago, O'Malley accused the GOP of "worshipping" tax cuts for the wealthy. That may be, but it's clear here in Maryland that O'Malley is happy to bow down before the alter of tax increases on the poor and working class.
Now the data on millionaires is specific to families with at least $1 million in liquid assets, but let's consider questions of income in Maryland - afterall, the higher your income, the more likely you are to accrue $1 million in liquid assets. The median household income in Maryland is $69,000 a year. Under Maryland's tax schedule, the median household would face an effective tax rate on 4.67%. A household earning between $500,000 and $1 million would face an effective tax rate of 5.2%, earn over $1 million and your effective tax rate slowly approaches a maximum of 6.25%.
Nationally, the median income is $50,000 a year. Under the current federal marginal tax rates, the median household would face a tax burden of $6,650 - an effective tax rate of 13.3%. A household earning $1 million dollars would pay $290,000 for an effective tax rate of 29%.
In Maryland, the effective tax rate imposed upon a millionaire is roughly 11% greater than the effective rate charged the median household. Nationally, the effective tax rate assessed on a millionaire is 118% greater than the rate assessed on the median household.
Compared to Maryland's current marginal income tax rates, the current federal rates (signed into law by George W. Bush) are far more progressive.
So before the state considers placing an even greater tax burden on poor and working class Marylanders, lawmakers may want to consider making the state's income tax more progressive. Perhaps the burden of supporting the state should rest more heavily on those who can best afford to support it and who best benefit from the services and stability the state provides.
As pointed out in a prior post, according to the Congressional Budget Office, the bottom 20% of wage earners pay nearly 1% of their income on excise taxes on gasoline and motor fuel alone. By contrast, the top 20% pay only 0.3% of their income on such taxes. When all federal excise taxes are considered, the proportional burden placed on the bottom 20% rises to nearly 2.8%, while the burden placed on the top 20% is only 0.5%. A 3% burden compared to a 0.5% burden... that's the very definition of a regressive tax folks.
And lest we forget, Maryland's sales tax was already increased by 20% under O'Malley's watch and an analysis conducted by the Maryland Budget and Tax Policy Institute determined "Increasing the sales tax rate has a seven times greater impact on the lowest income families compared to the highest income families." Further with regard to state and local taxes the poorest 20 percent of Maryland families paid nearly twice as much, as a percentage of their income, in taxes as did the very richest Maryland families.
No wonder Maryland tops the nation in millionaires, what millionaire wouldn't want to live in a state with a nearly flat income tax and an increasingly regressive tax burden shifted to the poor? Who wouldn't want to tow their yacht to the Bay on roads and bridges disproportionately funded by the excise taxes and fees imposed on commuters, construction workers, single parents shuttling between school drop-offs and two part time jobs, or the unemployed driving to job interviews?
Perhaps the thinking is millionaires can pack up and move if their taxes are increased, but the poor are stuck here and will have no choice but too stay and pay? That's certainly not progressive thinking. Perhaps it's time to occupy Annapolis?
