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1 Curtis S. Dubay, Governor O'Malley's Tax Plan Puts Maryland at Risk in Regional Tax Competition 1 (2007)

handle is hein.taxfoundation/ffbajxz0001 and id is 1 raw text is: FOUNDATION Governor O'Malley's Tax Plan Puts Maryland at Risk in Regional Tax Competition Fiscal Fact No. 109 by Curtis S. Dubay October 26, 2007 Official Data Showing Surpluses Casts Doubt on Structural Deficit Claims Introduction Maryland Governor Martin O'Malley's new fiscal plan would raise five taxes and cut one. The net result would be a tax increase of almost $2 billion according to the governor's own figures.' The current level of tax revenue is $14.6 billion according to the Census Bureau, so in percentage terms, the governor is proposing an almost 14% tax hike. This brief analysis will use two Tax Foundation rankings to examine the Maryland tax package's potential impact on tax competition in Maryland's region. The first metric is a state-by-state ranking of business tax climate, the State Business Tax Climate Index, which compares the rates and brackets and various rules of state income, sales and property taxes. The goal is to measure the efficiency of each state's tax system without regard to how much is collected. To rank tax burdens, we measure taxes as a percentage of income in each state without regard to specific tax laws. In other words, no matter which taxes are high or low in a state, we tally the collections and compare them to income, which yields a percentage. Adjustments are made for taxes paid by non-residents. The O'Malley Plan In brief, Gov. O'Malley proposes six straightforward changes and one mixed bag: Raise the general sales tax rate from 5% to 6%. Raise the gas tax each year by the amount of inflation. Raise the corporate income tax rate from 7% to 8%. Approve video lottery terminals that resemble slot machines at various state locations, intending to bring in $500 million annually. Raise the cigarette tax rate from $1 to $2.

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