Baltimore ranks 72nd on magazine's tax list There is grumbling, but magazine did halt anti-Md. methods

January 03, 1996|By Jay Hancock | Jay Hancock,SUN STAFF

Maybe Money magazine listened.

For years, Maryland officials have complained loudly each time Money classified the state as one of the country's worst "tax hells." The magazine's study was flawed, officials argued, because it counted local income taxes in Maryland, but not for many other states in which they were levied. This year Money changed its tune. Instead of ranking states by taxation, it ranked the country's 100 largest metropolitan areas. Because local income taxes were counted wherever they applied, what critics said was the magazine's bias against Maryland presumably has disappeared.

And Maryland's score improved a bit. Last year the state was the second-worst "tax hell" in the country, Money said.

In this year's survey, based on 1995 tax rates, Baltimore, the only Maryland locality listed, had lower taxes than 28 other areas. It had higher taxes than 71. It ranked just behind Los Angeles and just ahead of Springfield, Mass.

But the change didn't satisfy Maryland's economic development chief.

"Do I feel better about being 72nd? I really don't," said James T. Brady, secretary of the state Department of Business and Economic Development.

Both last year's and this year's analyses "suggest that we really have to do some very positive things to make us more competitive from a tax standpoint," he said.

Maryland's income tax, one of the key factors in the Money survey, is likely to be one of the most controversial issues of this year's General Assembly. Business groups want to slash the tax by as much as 15 percent. Gov. Parris N. Glendening and legislative leaders have urged a much more conservative approach, arguing that the state's solvency is at risk.

For the survey, Money assumed that the taxes were for a family with $81,005 in earned income and $5,258 in investment income -- what the magazine considers average for its readership. The family was assumed to live in a four-bedroom house in a community typical for that income group.

The mythical Baltimore-area family would have paid $10,658 in state and local income taxes, property, sales and gas taxes. The survey didn't include federal income taxes.

Money officials were unable to say where exactly in the region their family was supposed to live. But to compute property taxes, the magazine assumed that the Baltimore-area family was paying $3,433 in annual property tax on a house with a market value of $277,200, an editor said.

Money editors disputed Maryland officials' criticism of previous surveys, saying that the state-by-state tallies counted local income taxes wherever at least half of a state's residents paid them. But they acknowledged that a metro-area survey removes some uncertainties.

"With the state table, it was hard to reflect where there were local income taxes," said Kelly D. Smith, Money's assistant Washington bureau chief. "This way, it's more accurate."

The Knoxville, Tenn., area won, with the family paying $4,641 in annual taxes.

New York City ranked last -- 100th. The test family there would have paid $17,144 in taxes.

Regional taxes

Money magazine's rankings of metro areas by local and state tax levels:

LEAST EXPENSIVE

1)Knoxville, Tenn.

2)Las Vegas, Nev.

3)Sarasota, Fla.

4)Jacksonville, Fla.

5)Orlando, Fla.

MOST EXPENSIVE

1)New York City, N.Y.

2)Long Island, N.Y.

3)Buffalo, N.Y.

4)Pittsburgh, Pa.

5)Syracuse, N.Y.

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