Ehrlich: Maryland's millionaires have taken flight
Former governor Robert L. Ehrlich Jr. (R), who is gearing up to run again, on Saturday stoked a debate over whether Maryland's so-called "millionaires' tax" is driving high-income earners out of the state.
Maryland has seen about a one-third decline in the number of millionaire filers since the state imposed a three-year surcharge in 2008. The measure was part of a package designed to make up revenue lost by the repeal of an unpopular computer services tax.
On his weekly radio show Saturday, Ehrlich pointed to an online Wall Street Journal opinion piece that seeks to make the case that Maryland's "soak-the-rich theology" has prompted many of the state'stop earners to relocate -- taking their talents and tax dollars with them.
Saturday's show on Baltimore's WBAL featured some "I-told-you-so" banter between Ehrlich and his wife, Kendel, who co-hosts.
"This is not exactly my toughest prediction," Ehrlich told his wife after she noted he had warned of this outcome at the time the surcharge was adopted. "Successful people tend to leave. ... It's class warfare. It's just lousy policy."
Gov. Martin O'Malley (D), who supported the surcharge, continues to believe such arguments are misguided, a spokesman indicated Saturday.
Most analysts have suggested the largest reason for the dropoff in income reported by millionaires is that they made less money during the recession, particularly on capital gains -- which the Journal piece acknowledges is a contributing factor.
The governor "believes the global economic meltdown has had an impact on every Maryland family," said Rick Abbruzzese, O'Malley's communications director.
Others have suggested that the hassle and cost of moving is a large deterrent to trying to escape the surcharge, which is scheduled to expire at the end of this tax year.
Once the surcharge expires, Maryland's top marginal tax rate, applied to income above $1 million, would return to 5.5 percent from 6.25 percent.
Some lawmakers have proposed keeping the surcharge after 2010, but O'Malley opposes that, Abbruzzese said.
March 13, 2010; 2:42 PM ET
Categories: 2010 Elections , John Wagner
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