Wednesday, March 02, 2016

Facts & Figures Regarding Maryland’s Tax Rates

On February 29, 2016, the Tax Foundation released a new dataset called “Facts & Figures 2016: How Does Your State Compare?” The dataset is a one-stop-shop for much of the state-level data on tax rates and spending that the Tax Foundation collects and releases over the course of the year.
Here are some interesting facts about Maryland’s tax rates:
  • Maryland ranks 7th highest in the United States with a state and local tax burden of 10.9% of income. That means that the average Maryland resident pays $5,920 in state and local taxes each year. (See FSF President Randolph May’s January 2016 blog for more on this.)
  • Maryland ranks 16th highest in the U.S. with a 6% state sales tax rate. However, Maryland localities do not charge a sales tax, so combining state and local sales tax rates, Maryland ranks 37th in the country.
  • Although Maryland has a flat corporate income tax rate, it is one of the highest in the country at 8.25%. (Because some states apply a progressive corporate tax rate, there are no rankings for these.)
  • Despite low gas prices recently, they could be lower. Maryland adds 32.60 cents in taxes and fees to every gallon purchased within the state. That is the 13th highest amount in the U.S.
  • Maryland imposes relatively high “sin” taxes, which are taxes on items that are considered more or less harmful. Maryland’s $2.00 excise tax rate per 20-pack of cigarettes is the 11th highest in the country, while its $4.05 excise tax rate per gallon of spirits is 31st highest in the country. Maryland’s wine tax rate is $1.35 per gallon, which ranks 12th highest in the country, and its beer tax rate is 9th in the country at $0.49 per gallon.
  • Lastly, Maryland’s cell phone tax rate is a whopping 12.67%. This rate ranks Maryland 14th highest in the U.S.
During the first year of his term, Governor Larry Hogan did a commendable job of beginning to address unnecessary barriers to economic growth in Maryland, including by reducing over 100 state fees which will save Marylanders an estimated $51 million over five years. Additionally, Governor Hogan’s proposed budget for fiscal year 2017 includes an estimated tax savings of $480 million over the next five years. However, there still is a lot of work to be done towards lowering tax rates, reducing regulatory barriers, and creating a more efficient state government.
Also, see the January 2016 Perspectives from FSF Scholars by FSF President Randolph May and me entitled “Achieving Efficient Government and Regulatory Reform in Maryland.”