Land of pleasant living — thanks to your taxes, folks

Maryland's wealthiest ought to be proud of the state they've help build

March 24, 2012|Dan Rodricks

I heard from a self-described Maryland millionaire. His name was Les. He was kind of cranky. He put the hate on me for Tuesday's column about state Sen. Bobby Zirkin (Democrat and defender of millionaires), and Les condemned the Maryland Senate for raising the tax rate on households, like his, with annual incomes of $500,000 or more. "If it's wrong to balance the budget on the backs of the poor," Les said, "then it's wrong to balance the budget on the backs of the rich."

I guess that means Les dislikes our progressive income tax system, where the taxable rate rises along with taxable income. He must think a family that makes $1,028,000 a year should pay at the same rate as the family that makes $28,000 a year, and that patching up the government's operating budget ought to be achieved with equal sacrifice, as a percentage of income, by all.

You can appreciate Les' we're-all-in-this-together sentiment. I mean, it's nice.

But this state and this nation agreed some time ago on the fairness and logic of progressive taxation — that is, reducing the burden on those who can't pay as much and shifting it to those who can. The Maryland Senate, while inflicting some additional pain on all of us, agreed that those who live at $500,000 or above could contribute a couple of thousand dollars more per year to help balance the state budget while sending $30 million to Baltimore and the counties for school repairs.

People such as Bobby "I'm disgusted" Zirkin, and very many Republicans, disagree. They see any expansion of the progressive tax system — that is, shifting more of the burden to the top — as class warfare.

And some believe additional taxation kills economic expansion in Maryland. I keep hearing that the real "job creators" are fleeing because the Democratic power structure continues to inflict ruinous taxes on businesses and the people who run them.

A fellow wrote from Monkton, one of the wealthiest communities in one of the wealthiest states in the country, to join the cranky chorus:

"It's been documented that 'the wealthy' are moving out of state as are more and more of their assets. Professionals are leaving as well. Maryland is fortunate in that it has a large doctor base but let me tell ya, my wife's a family practice doc ... and I'm fast thinking that the grass (and offers) are getting more than greener on the other side of the fence."

Just FYI: Maryland leads the nation in per capita millionaires, according Phoenix Global Wealth, which puts out an annual report on affluence in the states. The 2011 ranking showed that approximately 7.22 percent of Maryland households are millionaires. (The calculation does not include home values or retirement accounts.) I would assume that a good number of such households were "professionals," including doctors.

"Comforting ourselves with the knowledge that tax increases are going into our school system is far from consoling," the Monkton writer went on. "Maryland education is as black a hole as the universe. It's worse than owning a sailboat!"

Just FYI: Maryland's public school system has been ranked No. 1 overall for four years in a row by Education Week. It was third nationally in student achievement last year. In addition, during the O'Malley administration, the state has kept a commitment to affordable tuition rates at Maryland universities. This is one of several reasons the state operating budget has grown by more than $5 billion since 2007. But we've been investing in schools and kids, not sailboats.

As for our allegedly bad business climate and the claim that taxation of "job creators" is ruinous to the state's economy, I'll share one more fact from the wonk playbook.

Last summer, the Council on State Taxation — you have to be a wonk to be a member — put out its annual report on state and local business taxes across the nation. The report tabulates property, sales, excise, gross receipt, corporate income, franchise and unemployment insurance taxes as a percentage of gross state product. Maryland's stood at 3.7 percent of GSP. The national average is 5.0.

So, Les, Peter — don't be so cranky, you guys. Life here is better than you think. Take some pride in that. Sit on your decks, have some brandy, pet your hounds, light up a cigar.

Dan Rodricks' column appears Tuesdays, Thursdays and Sundays. He is the host of "Midday" on WYPR-FM. His email is dan.rodricks@baltsun.com.

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