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Wealthy leave Md. suburbs, IRS data show

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Photo - Rush hour traffic in Montgomery County is shown. The most recent Internal Revenue Service data show that the tax bases in Montgomery and Prince George's counties shrank a bit in 2010 as the wealthy moved away from the area. (Examiner file)
Rush hour traffic in Montgomery County is shown. The most recent Internal Revenue Service data show that the tax bases in Montgomery and Prince George's counties shrank a bit in 2010 as the wealthy moved away from the area. (Examiner file)
Local,Maryland,Ben Giles

Tax bases in Montgomery and Prince George's counties shrank a bit in 2010 as the wealthy moved away from the Washington-area suburbs, according to the most recent Internal Revenue Service tax data.

Montgomery County's tax base decreased by 0.07 percent, or $22.1 million in gross aggregate income, from 2009 to 2010. And Prince George's County lost $51.4 million, a 0.27 percent decrease in its tax base, according to an analysis by Change Maryland, a grassroots advocacy group that blames the losses on Maryland's tax policies.

Maryland lost $1.7 billion of its tax base between 2007 and 2010 as more people left the state, the report found.

"In 2007, Maryland passed some of the largest tax increases in history, and I believe a lot of the exodus of taxpayers out of the state has to do with the tax burden," said Larry Hogan, founder of Change Maryland and a former member of Republican Gov. Bob Ehrlich's administration.

The continuous tax increases proposed by Gov. Martin O'Malley won't help the situation, Hogan said.

Rates rose again this year after the General Assembly passed tax hikes for Marylanders earning more than $100,000 annually. Rates climb as high as 5.75 percent for those earning more than $250,000 annually.

And tax exemptions shrank for residents earning more than $100,000. Exemptions were eliminated altogether for residents earning more than $200,000 annually.

The new tax rates are retroactive to the beginning of 2012.

More people actually moved into Montgomery County from 2009 to 2010 than moved out, but the income levels of families that left exceeded the incomes of those moving in.

But the migration of taxpayers in and out of Maryland counties and the state itself has little to do with taxes, according to Neil Bergsman, director of the Maryland Budget and Tax Policy Institute.

"Obviously there are people moving both ways, back and forth, and the number of people who migrate from state to state turns out to be very small depending on the time frame you're looking at," he said. "It's a percent or two. Most people are staying put."

Those who do move are forced to do so by major life events, like getting a new job or getting married, he said.

Maryland still has the highest percentage of millionaire households in the country, according to a Phoenix Marketing International report.

bgiles@washingtonexaminer.com

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