A report from the organization Change Maryland that said wealthy people are moving from Maryland to other states because of high taxes sparked a political brouhaha this week.
Change Maryland, which was founded by Larry Hogan, a Republican who has run unsuccessfully for Congress and governor, said the state lost $390 million in tax revenue from 2007 to 2010 because of wealthy residents moving to states with lower taxes.
However, Neil Bergsman, director of the nonpartisan Maryland Budget and Tax Policy Institute, said the claims by Change Maryland were wrong in the first place.
“The economists and demographers who have done those extensive studies have not found a link between tax structures and people’s location decisions,” Bergsman said. “It has more to do where the job is, where their family is, where the golf course or beach resort they want to retire to is.”
Bergsman said if state taxes were such an issue, the wealthiest would be moving to states with low-income tax structures. Instead, those states rank among the poorest in the nation while Maryland ranks among the wealthiest.
Change Maryland’s report only counted wealthy people moving from the state. It did not take into account the number of them moving into the state during that same time period, Bergsman said.
“It’s just not credible to say high-income people are fleeing the state,” Bergsman said. “There’s not a caravan of BMWs with crates of Perrier strapped to the roof filing out of Chevy Chase or Kensington. It’s just not happening.”
On Tuesday, after the report received national coverage from financial cable channel CNBC, Gov. Martin O’Malley’s office posted a blog entry, citing sources from Ernst & Young, the Tax Foundation and others to dispute Change Maryland’s claims.
The governor’s office pointed out Change Maryland’s connection to Hogan, who criticized O’Malley’s office, in turn, for mentioning his unsuccessful political bids.
“It was a childish lashing out,” Hogan said. “Once again, Gov. O'Malley chose to attack the messenger, rather than address the facts. We are not going to lower ourselves to his level and resort to name calling.
“But, it was surprising that he used a state website, using taxpayer funds, to make this kind of a petty, personal, partisan attack.”
The O’Malley response, which cited a number of sources to rebut Change Maryland’s report, was criticized by one of the sources, the conservative Tax Foundation, a Washington, D.C., think tank that entered the fray on the side of Change Maryland.
The Tax Foundation said that although O’Malley’s office relied on Tax Foundation data to “show Maryland competitive in certain narrow areas,” it “misses the forest for the trees.”
The Tax Foundation says Maryland ranks 42nd out of 50 states in tax structure and the state was not competitive because of it.