Montgomery County officials are wondering where all the millionaires have gone, as the shrinking pool of wealthy taxpayers is wreaking havoc on the county's finances.The tax is set to expire at the end of this year unless it is extended by the state General Assembly. Maryland's governor Martin O'Malley was a strong backer of the new tax, but a spokesman for his office said he does not support its extension and always intended the tax to be temporary. It will be interesting to see if the Democrat contolled legislature has gotten the message.
County officials recently pegged the budget deficit for the next fiscal year at $761.5 million. Much of the gap is caused by a drop in income tax revenue, and much of that drop is tied to a small number of wealthy county residents who lost money in a poor economy, died or fled the state's new millionaire tax.
Montgomery lost $4.6 billion in taxable income from tax years 2007 to 2008. More than 82 percent of that drop comes from taxpayers with incomes of $1 million or more, county records show. During that period, the number of income tax returns above $1 million fell from 3,172 to 2,321, a 27 percent decrease.
A weak economy that ate away at capital gains and slowed the growth of small businesses can account for much of the drop. But there's been a fierce debate since the state raised taxes for millionaires to 6.25 percent from 5.5 percent in 2008 whether millionaires are fleeing en masse for states with lower tax burdens.
County data show that 216 millionaires who filed taxes for 2007 did not file with the state for 2008.
In the previous four years, the number of millionaires who didn't file taxes the previous year averaged 119. Chief Administrative Officer Tim Firestine called last year's increase "significant" and said there's strong evidence to suggest that the millionaire tax is hurting the county.
County Executive Ike Leggett said some wealthy county residents who own houses in other states told him that they would establish residency in other states to avoid the millionaire tax.
"You don't want to give them that temptation," Leggett said, referencing whether the state should renew the tax. It is set to expire at the end of this year, but the General Assembly is considering an extension.
In my experience, temporary tax is usually an oxymoron.
HA HA - the problem with socialism is that you eventually run out of other people's money.
ReplyDeleteI cannot wait for medical specialists to move their facilities to the Caribbean basin when Obamacare is passed. Then, only the affluent will have access to first-class health care.
The rest of us schmucks (middle class and welfare recipients) will be standing in line at the county health clinic. BUT IT WILL BE FREEEEE!!!!!