2009 State Business Tax Climate – MD sinking like a rock?
Posted by Ed C on Monday, October 13, 2008
Remember when Gov. O’Malley said that he wanted to raise taxes to make Maryland more “competitive” with our neighboring states? The Tax Foundation has released its annual comparison of the Business Tax Climate (Which States Are Best for Business? 2009 State Business Tax Climate Index – Six Edition). The summary is here and the full report (pdf) is available here.
How did Maryland fare this year?
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.
How large was this change compared to other states? A histogram generated from the change from 2008 to 2009 in Table 1 shows how Maryland stands out from the crowd this year.
The ten worst business tax climate state ranks are:
- 41. Minnesota
- 42. Nebraska
- 43. Vermont
- 44. Iowa
- 45. Maryland
- 46. Rhode Island
- 47. Ohio
- 48. California
- 49. New York
- 50. New Jersey.
As for our neighbors? Delaware ranks 10th, Virgina 15th, and Pennsylvania 28th.