Maryland residents pay higher state, local taxes than Va., D.C.

Virginia,Leah Fabel

With federal tax day approaching, Washington area families are also contending with a high state, county and local tax burden, with a typical household in some Maryland suburbs facing more than $15,000 in combined non-federal taxes, while Northern Virginia families get off a bit easier at about $13,000.

And while local officials would argue those taxes are the price the area pays for top-notch public services, the relationship between the two is not always easily measurable.

A typical area family -- one with $150,000 annual household income, a home valued at $350,000 and cars worth $20,000 -- pays more in state and local income and property taxes in Prince George's County than they do in Arlington, where, despite the lower tax rate, the schools are rated higher, the crime rate lower, and the budget more stable, according to a Washington Examiner analysis of tax rates in each jurisdiction.

Residents of Prince George's County pay $2,000 a year more than those in Arlington County and the gap is even greater when income and property values are running higher, the analysis shows.

Taking into account income, vehicle and property taxes, Prince George's County residents pay even more than those in Montgomery County, which has always had one of the largest tax burdens in the region. A family that pays $14,400 a year in Montgomery would pay $15,200 in Prince George's.

Arlington and Fairfax come in on the low end at just over $13,000, even with Virginia's scorned personal-property tax on cars and other vehicles.

The same family would pay $14,500 if they lived in Washington, the analysis shows.

"Economists have long based their analyses on the fact that people do react to taxes, but to what degree it's true is difficult to measure," said Mark Robyn, economist with the nonpartisan Tax Foundation.

More specifically, people are likely to respond to the services and taxes that directly affect them, Robyn said. Retirees, for example, often live where sales taxes are low, but income taxes, which don't affect them, are high.

There are marked philosophical differences between how area jurisdictions tax residents. In Maryland counties, unlike Virginia, the 6 percent sales tax does not apply to groceries. But the higher taxes overall are driven by Maryland counties' ability to impose a local income tax - 3.2 percent in Montgomery and Prince George's. Combined with a state income tax rate of about 4.75 percent, most employed Marylanders in the D.C. suburbs end up paying nearly 8 percent on every dollar earned.

The high income tax rate -- and, conversely, a lower property tax rate than in the Virginia counties -- reflect the county's political values, too, said longtime Montgomery Councilman Phil Andrews.

"Over the past decade there's been an effort in Montgomery County to establish a more progressive tax structure, and to rely more on income taxes and less on property taxes," Andrews said.

The recent recession threw a wrench into that plan by driving down income and subsequent income taxes, Andrews said, "but it was still a good direction in which to move."

In neighboring Virginia counties, state law allows jurisdictions less flexibility to tax residents. County boards are unable to impose a restaurant tax or a local income tax, for example, and thus have been forced to rely on property taxes, which they can control.

"We've been very successful at holding the line on taxes while maintaining a high quality of life," said Fairfax Chairwoman Sharon Bulova. "But we are overreliant on real estate taxes. ... Would we like to diversify so we're not so reliant on them? The answer is yes."

The taxman cometh
In the Washington area, people working hard for their money often wonder, come April 15, where on Earth it has all gone. Here's an approximate look at some state and local taxes paid by a typical family in the region.
State income Local income tax Property tax (proposed, per $100 value) Vehicle (proposed, per $100 value) Sales tax Energy (approx. amount/mo.)
Washington, DC 8.5% -- $.85 -- 6% (no groceries) $22
Montgomery 4.75% 3.2% $.716 -- 6% (no groceries) $23
Prince George's 4.75% 3.2% $.96 -- 6% (no groceries) $13
Fairfax 5.75% -- $1.09 $4.57 5% (2.5% on groceries) $11
Arlington 5.75% -- $.968 $5.00 5% (2.5% on groceries) $9
Loudoun 5.75% -- $1.32 $4.20 5% (2.5% on groceries) $11
Prince William 5.75% -- $1.21 $3.70 5% (2.5% on groceries) $4
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