MD’s tax the rich FAIL

Two years ago the state of Maryland instituted a “millionaire tax.” The results have been highly predictable – there are now fewer millionaires and tax revenues are down.

Montgomery County officials are wondering where all the millionaires have gone, as the shrinking pool of wealthy taxpayers is wreaking havoc on the county’s finances.

County officials recently pegged the budget deficit for the next fiscal year at $761.5 million. Much of the gap is caused by a drop in income tax revenue, and much of that drop is tied to a small number of wealthy county residents who lost money in a poor economy, died or fled the state’s new millionaire tax.

Montgomery lost $4.6 billion in taxable income from tax years 2007 to 2008. More than 82 percent of that drop comes from taxpayers with incomes of $1 million or more, county records show. During that period, the number of income tax returns above $1 million fell from 3,172 to 2,321, a 27 percent decrease.

A weak economy that ate away at capital gains and slowed the growth of small businesses can account for much of the drop. But there’s been a fierce debate since the state raised taxes for millionaires to 6.25 percent from 5.5 percent in 2008 whether millionaires are fleeing en masse for states with lower tax burdens.

County data show that 216 millionaires who filed taxes for 2007 did not file with the state for 2008.

No – they still don’t get it…

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