For the past five years, Kiplinger, a publisher of business and personal finance news, releases a tax map which shows the best and worst states in terms of tax burden. Anyone who has lived in Maryland for any period of time — and paid taxes here — probably wouldn't be surprised to learn that our home state is not only among the least tax-friendly states in the U.S., it came in dead last.

"Maryland vaults to the top of our least tax-friendly list this year for one reason: steep local income taxes," according to the Kiplinger report. In addition to the state income tax rate, which ranges from 2 percent on taxable income less than $1,000 to 5.75 percent on the state's highest earners ($250,000 single, $300,000 joint), each of Maryland's 23 counties and Baltimore City levy additional income taxes, averaging 2.9 percent.


According to the Tax Foundation, jurisdictions in 17 states collect some local income tax. There are only two states in the union, Maryland and Indiana, in which every county collects a local income tax. By tacking these levies onto the state's income tax, the effective rate soars to 7.45 percent for an individual and 7.91 percent for those filing jointly.

"A married couple with income of $155,000 a year would pay more than $10,700 a year in Maryland income taxes," according to Kiplinger's snapshot. "That's nearly half of what they would already owe the Federal government."

Carroll County's income tax rate is 3.03 percent, above the state average, but certainly not the highest among Maryland's counties, tied for 10th with Charles County. For context, these local income taxes make up a significant portion of county government's revenue. In the Fiscal Year 2018 budget, while property taxes are still the most significant revenue generator — nearly $200 million or about 50 percent of all revenues — income taxes were expected to bring in about $145 million, more than a third of county revenue.

Once you get past income taxes, though, the rest of Maryland's rates aren't too bad. The 6 percent sales tax is the 16th highest in the country, but many other states allow counties or cities to collect local sales taxes on top of the state tax. When comparing combined sales taxes, Maryland fares pretty well, ranking 37th, according to the Tax Foundation. Food and prescription and nonprescription drugs are exempt, which isn't the case in places like Virginia, which taxes groceries.

Property taxes in Maryland are slightly below the national average. Based on the medium home value of $286,900, property taxes average about $3,142, according to the Kiplinger breakdown.

However, Maryland is one of just two states with both an inheritance tax and an estate tax. The inheritance tax ranges from 0 to 10 percent, depending on how closely you are related. The estate tax, with a maximum rate of 16 percent, is levied on estates exceeding $3 million in 2017, $4 million in 2018. Starting in 2019, Maryland will match the federal estate tax exemption, currently $5.49 million.

So are all these taxes enough to drive people out of the state? Maybe.

Travis H. Brown actually wrote the book on it, called "How Money Walks," about how millions of Americans moved between states from 1995 to 2010, and took over $2 trillion in adjusted gross incomes with them, analyzing IRS data. Overwhelmingly, he found states without personal income taxes gained $146.2 billion in working wealth, while states with the highest personal income taxes lost $107.4 billion during that time period.

A map of the data can be found at www.howmoneywalks.com, and showed Maryland was one of the biggest losers, losing $11.83 billion from 1992 to 2015. Carroll County, though, actually fared quite well over that time frame gaining $898 million in AGI, mainly drawing from other Maryland counties, while losing some to York and Adams counties in Pennsylvania and beach counties Worcester and Sussex, Delaware.

However, from 2011 to 2015, the latest data available from the IRS, shows a different trend. More people are leaving the county than are coming in and they are taking their money with them. Carroll County has lost about $35 million in adjusted gross income in that time frame. Interestingly, of the people leaving the county, about the same number are migrating within Maryland than are leaving the state entirely, which seems to indicate taxes might be a factor, but not the primary reason for leaving — at least in Carroll.

A majority moving out of state do tend to go South, to places like Florida and North Carolina, where the tax burden might be less, but also, the weather is warmer. It's also not clear whether Virginia, where a majority of Marylanders leaving the state went, is considered the South, in which case, that might be driven more by proximity and employment opportunity than tax breaks.

The data seems to indicate that taxes are a factor when considering a move, especially for retirees. But are they the primary cause? I suspect there is far more at play here. If you've recently moved to or from Carroll County or Maryland, I'd love to hear back from readers about whether taxes played a role.

Wayne Carter is the editor of the Carroll County Times. Reach him at wayne.carter@carrollcountytimes.com.