Say you get a good job in the environs of our nation’s capital. (The region has some of the country’s lowest unemployment rates, with jobs in government, high-tech, and the military-industrial complex.) Your choices of where to live are the District of Columbia, Maryland, or Virginia.
Maryland has just chosen to raise its income tax rates to match those of D.C., so they will be tied for fourth highest in the nation. Virginia’s taxes, on the other hand, are not too far from reasonable. Where would you choose to live? What do you think will happen in the long run to the economy of these three regions?
From the Washington Post:
More than 300,000 Maryland residents will pay higher income taxes under a package given final approval by the legislature Wednesday.
The tax increase affects single-filers reporting income in excess of $100,000 and joint-filers reporting more than $150,000 in Maryland, the state with the nation’s highest per-capita income.Democratic lawmakers closed ranks behind Gov. Martin O’Malley (D), who argued that his administration needed more money to continue record spending on education.
O’Malley’s tax increases — combined with a move the legislature supported to shift teacher pension costs to counties — will close half of a $1 billion gap that had been forecast for the rest of the decade.
The legislation — passed by the Senate on Tuesday and the House on Wednesday — will also widen the income tax divide between Maryland and Virginia. Maryland’s new top state-local tax bracket will tie the District’s for fourth-highest in the nation, at 8.95 percent. Across the Potomac, the top rate in Virginia is 5.75 percent.