Thursday, May 17, 2012

Maryland Tax Increases an Irresponsible Move

By Preston Cooper


Photo by Jay Baker.
Yesterday, the Democrat-controlled Maryland legislature sent a bill to Governor Martin O'Malley (also a member of the Tax-and-Spend Party) that would increase taxes on the middle class.

Now, I'm not going to say that I've never met a tax increase I didn't immediately despise. Some are truly necessary evils. But this one transcends the boundaries of what is proper.

The measure implements a 0.25% increase on the taxes of individuals earning over $100,000. At first glance, this six-digit figure seems like it belongs to the wealthy. Governor O'Malley would certainly like you to think so. However, I'd like to step back and see who this level of income actually belongs to. Let's start with the national level.

The Census Bureau reports that the median income for families in the United States is around $51,000. This figure encompasses everyone, from Alaska to New York City. Costs of living across the country are vastly different. A studio apartment in Midtown Manhattan might cost the same as a six-bedroom mansion in rural Nebraska. With such different costs of living, incomes vary wildly between regions, meaning wealthy for one region might be middle class for another.

On the national level, therefore, $100,000 seems like exorbitant earnings, being nearly twice the national median income. Let's take a look at Maryland. Here, in my fine state, the median income is around $71,000, a huge leap from the national figure. Once again, this gap stems from a much-higher cost of living in Maryland. $100,000 draws closer to the median income; the upper end of the middle class will see their taxes go up. Governor O'Malley and his legislature draw dangerously close to a just taboo of politics: NEVER increase taxes on the middle class. Especially in an economy as sluggish as ours.

Let's take it a step further and look at Montgomery County, a suburb of Washington, DC that one could easily mistake for a part of the city itself. Median income in Montgomery County is $92,000 - a figure almost identical to the breaking point Governor O'Malley so carelessly chose as the threshold of the upper class.

Montgomery County is no enclave of the elite; the mean cost of a simple, single-family home here is $694,000 - over two and a half times the national average. For this highly urbanized, East Coast county, wealthy on a national scale is just middle-income.

Governor O'Malley's bill will essentially raise taxes on half the residents of Montgomery County.

We have different tax brackets for a reason; wealthier people can afford to give up a larger percentage of their income. However, the situation in Maryland underscores the trouble with standardizing these tax brackets at a national level, or even a state level. I'm not saying that we should abolish national income taxes and set all rates at a county level, but I do believe tax-and-spend politicians like Governor O'Malley and President Obama should give more thought to who they may be hurting before taking away your hard-earned money under the guise of populism.

All national and Maryland statistics can be found here. All Montgomery County statistics can be found here.

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