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There’s an old saying that “money talks and cow manure walks.” However, when it comes to state tax policy money walks as well. According to the new book How Money Walks Travis H. Brown, state tax policies have facilitated the movement of $2 trillion dollars between the states.
Using Internal Revenue Service records from 1995-2010 Brown analyzed the movement of people and money among the states.
In an interview with Watchdog Wire, Brown revealed that the data shows a strong correlation between higher tax states and net out-migration and loss of wealth.
This migration evidence is consistent with long-term econometric analysis observed by Dr. Art Laffer over the last forty years. The nine states without a personal income tax gained collectively over $146 billion from 1995 to 2010. Conversely, the nine states with the highest personal income tax rates, or per capita income burdens, lost more than $100 billion. Taxpayers have been moving to places where their work is more likely to be rewarded in every paycheck.
You can use the How Money Walks Web app to view migration data in your state.
Maryland is high tax. Since 2007 Maryland has implemented 37 tax/fee increases totaling more than $3.1 billion annually, according to the non-partisan grassroots group Change Maryland. Last year Maryland created a new, higher, income tax rate for those making over $100,000 and phased out personal income exemptions at certain levels. In 2007 Maryland create new marginal income tax rates ranging from 4.75 percent to 5.5 percent, and implemented the ill-conceived millionaire’s tax, raising rates on those earners from 5.5 percent to 6.25 percent.
So how many residents, and how much wealth has Maryland lost?
Since 1995 Maryland has lost 27, 433 residents, taking with them a net $6.5 billion in annual adjusted gross income. The majority of that wealth has been lost to Florida, North Carolina, Virginia, Pennsylvania, and West Virginia. Florida by far has been the greatest benefactor of Maryland’s tax policies. More than 33,000 people have fled Maryland for the Sunshine State, taking $3.7 billion with them.
Maryland is not only losing residents to other states, but job creating businesses as well. Between 2007-2010, Maryland lost 6,500 small businesses. At 8.25 percent Maryland’s corporate tax rate is nearly three points higher than neighboring Virginia, and a major reason why Maryland is at a major competitive disadvantage.
How Money Walks also digs down to metropolitan statistical area data. The MSA data paints a similarly gloomy picture for Maryland’s major metropolitan areas surrounding Baltimore, and Washington, D.C. Baltimore lost more than 32,000 residents taking $2.48 billion in annual AGI, most of it to neighboring Baltimore County. However, even though Baltimore County gained over 37, 645 residents from Baltimore City, it has lost $1.61 billion in annual AGI, most of it to Harford, and Carroll counties. A significant amount of people and money have fled both the city and the county to York County PA, a short drive north over the border.
Maryland’s two largest suburban Washington jurisdictions Montgomery and Prince George’s counties also saw significant out-migration and wealth loss. More than 24,000 residents left Montgomery County along with $4.33 billion in annual AGI. Most of the wealth and people moved west to Frederick County. Prince George’s County saw 27,880 people leave its borders taking with them $3.47 billion in annual AGI.
Tags: corporate tax, income tax, Maryland, migration, taxes
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