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Md. taxpayers finance Delaware retirements

Finance

There has been recent discussion of having certain Western Maryland counties secede and become a separate state. In addition, the governor of Texas is running ads touting his state as a better place in which to live and do business.

This brings to mind a recent trend that I have noticed. At least some of the people that I know are "voting with their feet."

As a retired school teacher, many of my friends and acquaintances are retired school teachers. In recent years, some of these retired school teachers have moved to Delaware. They did not choose to retire to Delaware to be nearer family members, and certainly not to move to a better climate. They made this decision due to the significantly lower tax rate.

Delaware has no sales tax, and the state's income tax and property tax rates are about two-thirds Maryland's rate. Delaware also has far fewer annoyance fees such as the "flush tax" and newly-implemented "rain tax." And as recently as this past summer, the Maryland gasoline tax was raised significantly, making it 15 percent higher than in Delaware.

These retired teachers are receiving their retirement pensions from the Maryland State Teachers Retirement System, and the system is funded, at least in part, by Maryland general funds. This means that Maryland taxpayer dollars are going to these new citizens of Delaware, presumably to be spent in Delaware. This also means that these new citizens of Delaware will be using their Maryland retirement money to pay their state taxes in Delaware.

Delaware's total budget for 2012 was about $3.5 billion, and Maryland's was about 10 times as large, at $35 billion. But Delaware is approximately one-fifth the size of Maryland, both in population and in land area. This means that Delaware's per-capita budget was about half that of Maryland's. This flies against the normal economic expectation that an increase in size usually means less per-capita expenditures.

Does Maryland really have to spend twice as much per citizen as Delaware? Does Maryland supply twice as much in services?

Iver Mindel, Cockeysville

Copyright © 2014, The Baltimore Sun
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