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As we have written before, what would we do without the Tax Foundation!

Last week, that expert, non-partisan organization released here their “2009 State Business Tax Climate Index.” 

Here is what they said about Maryland:

“Maryland ranks 45th overall, a drastic drop from its 24th rank last year.Maryland lawmakers achieved this remarkable feat by raising 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. They also created four new income tax brackets, raising taxes on filers earning more than $150,000 per year. Maryland’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.” (Underscoring Forum’s.)

What about Virginia? Pennsylvania? Delaware?

Virginia drops to 15th place from 14th in 2008, Pennsylvania rises to 28th place from 30th in 2008, Delaware stays in 10th place.  West Virginia rises to 36th place from 38th in 2008, and North Carolina rises to 39th place from 42nd in 2008.

The “Index” explains:

“The Tax Foundation presents the 2009 version of the State Business Tax Climate Index (SBTCI) as a tool for lawmakers, the media and individuals alike to gauge how their states’ tax systems compare. Policymakers can use the SBTCI to pinpoint changes to their tax systems that will explicitly improve their states’ standing in relation to competing states.” (Underscoring Forum’s.)

What about losing capital and jobs to other places?

“States with the best tax systems will be the most competitive in attracting new businesses and most effective at generating economic and employment growth. Although the market is now global, the Department of Labor reports that most mass job relocations are from one U.S. state to
another rather than to an overseas location. Certainly job creation is rapid overseas, as previously underdeveloped nations enter the world economy. So state lawmakers are right to be concerned about how their states rank in the global competition for jobs and capital, but they need to be more concerned with companies moving from Ithaca, NY, to Indianapolis, IN, … rather than from Ithaca to India. This means that state lawmakers must be aware of how their states’ business climates match up to their immediate neighbors and to other states within their regions.”(Underscoring Forum’s.)

Read the entire Background Paper “2009 State Business Tax Climate Index” here.

Some of Maryland’s taxing problems arise from the mindset of its establishment. Two Maryland economists, Steve H. Hanke and Stephen Walters, here summed up the perverse Maryland point of view:

“Thanks to the federal tax dollars collected from the rest of the country and spent in Maryland, the prevailing view of economic reality is inverted: The public sector is seen as the engine of prosperity, with the private one along for the ride. Reflecting this culture, our legislators often behave as if business is a problem to be solved.”(Underscoring Forum’s.)

Maryland’s enterprise unfriendliness, however, may well create opportunities for Delaware, Virginia, and Pennsylvania. 

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