The millionaires are fleeing Maryland, all right. But not because of the measly tax surcharge on income over $1 million.
They're bugging out because of Maryland's estate tax, which applies to a bigger portion of a dead person's hoard than the federal estate tax or those in other states.
Strange to tell, rich refugees didn't want to speak with me. But their lawyers did. They suggest the high inheritance tax costs the state a lot more than it brings in because absconding aristocrats don't pay any Maryland tax, let alone the one when they die.
FOR THE RECORD - Jay Hancock's column in Friday's editions gave an incorrect figure for a hypothetical family's Maryland estate tax. The maximum state tax on an estate of $3 million would be $182,000.
The Baltimore Sun regrets the error.
"For years and years, I have had clients who complained about Maryland taxes and never took any action," says Lowell G. Herman.
But recently, nearly a dozen customers with big stashes set up residence elsewhere, largely because of Maryland's failure to match other states in reducing or eliminating its estate tax, he says. "But that's just sort of the beginning. There are many others who are thinking about it."
Wailing rose from Annapolis last week after this newspaper reported that income tax returns from those making more than $1 million plunged by a third.
Suspicion focused on the millionaire tax, which takes 6.25 percent of every dollar pocketed over that amount. According to one theory, that slightly higher (and temporary) rate, which became effective last year, pushed plutocrats across the border.
The much more likely explanation is that the worst financial crisis in decades culled the ranks of million-dollar filers. But that doesn't mean numerous wealthy Marylanders aren't becoming wealthy Floridians or Virginians.
They are. But their problem is the estate tax, which involves much bigger dollars.
"Nobody's going to leave the state because income tax rates go up a point over a million dollars - or whatever it is. It's just not going to happen," says Stuart Levine, a Baltimore tax lawyer and adjunct professor at the University of Baltimore law school. "But they do have to leave to some degree because of the estate tax."
Maryland has a complicated relationship with rich people. As one of the wealthiest states in the country, it cultivates more than its share. But they don't like to stick around once they've amassed a pile. At least they don't want to be taxed here.
Along with a cameo appearance in baseball records for his 50-home run, 1996 season, former Baltimore Oriole Brady Anderson shows up in Maryland's tax annals.
