Last summer, an analysis of Internal Revenue Service data by the nonpartisan Change Maryland showed that the state lost $1.7 billion in revenue between 2007 and 2010 due to out-migration. Amid rising taxes, beleaguered taxpayers fled to Virginia and North Carolina. Now, the U.S. Bureau of Labor Statistics' latest quarterly employment report confirms the fact that rural low-tax jurisdictions like Worcester County are gaining jobs and expanding their tax bases, leaving high-tax jurisdictions like Montgomery and Prince George's counties in the rearview mirror.
The number of individual income tax filers moving to Worcester (home of Ocean City) increased by 2.07 percent between 2009 and 2010 -- the highest intrastate migration of any Maryland county. That should not come as a surprise because employment levels there have increased 51 percent since 2007, the highest job creation rate of any Maryland county, according to the BLS.
Why have employers and taxpayers been flocking to Worcester County? It's no coincidence. The Eastern Shore county also has the lowest property tax and lowest local income tax of any of Maryland's 24 jurisdictions.
Maryland's worst-performing jurisdiction in terms of job creation was Baltimore City, Gov. Martin O'Malley's old stomping grounds. While low-tax Worcester was creating jobs, Baltimore -- which has the highest property and local income taxes in the state -- was hemorrhaging 9,600 jobs -- and 1.41 percent of its dwindling tax base.
Worcester's dynamic job growth easily eclipsed employment gains in Maryland's two largest high-tax counties: Montgomery and Prince George's, both of which experienced a net outflow of taxpayers over the last five years. Although Montgomery County has a population of 989,794, it only managed to add an anemic 369 jobs. Worcester, with a population of just 51,514, managed to add 10,087 jobs and increase its tax base by 2 percent. Meanwhile, Prince George's, with a population of 871,233, lost 6,895 jobs as overburdened employers and taxpayers voted with their feet.
"We need only look to our own backyard for yet more proof that lower taxes lead to economic prosperity," said Change Maryland Chairman Larry Hogan.
But the fact that large tax burdens erode the tax base continues to elude most elected officials in Maryland, including O'Malley, even as their own constituents pack up and leave town before their very eyes.