Wednesday, October 11, 2006

Maryland's Business Tax Climate Ranking

Each year the Tax Foundation releases a report detailing how states stack up under its State Business Tax Climate Index (SBTCI). The bottom line: This year Maryland slipped to 29th place in the SBTCI ranking from 25th place last year. In other words, Maryland's lawmakers, media, and citizens should take note: There is a lot of room for improvement.

The Tax Foundation's new release is here and the study's Executive Summary is here.

The overall business tax climate index ranking is composed of scores in five sub-indices: Corporate Tax (7); Individual Income Tax (35); Sales Tax(8); Unemployment Tax(30); and Property Tax(41). So it is really in the individual, property, and unemployment tax areas that Maryland falls way short.

As the Executive Summary says: "Good state tax systems levy low, flat rates on the broadest bases possible, and they treat all taxpayers the same. Variation in the tax treatment of different industries favors one economic activity or decision over another. The more riddled a tax system is with these politically motivated preferences the less likely it is that business decisions will be made in response to market forces."

It ought to go without saying that business decisions which respond to market forces--rather than decisions responding to political preferences--will lead to a sounder, more robust economy that enhances overall consumer welfare for all of Maryland's citizens.