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September 2, 2009

Government-employee layoffs and the budget

Today's column is on how Gov. O'Malley and the rest of Annapolis have coped with the fiscal crisis. The verdict is: Not bad. I might have been harder on O'Malley for not doing more to pare the government work force during the worst recession in 70 years, except for this statistic: Maryland ranks very well for the number of state and local government employees per capita.

I suspect there is more to the story. Maryland's taxes are high compared with those of other states, which does not imply efficiency. But if we're not spending the money on state and local government workers, where is it going? Two guesses: Government services performed by private contractors. Or entitlements. But I do not know. Anybody got an idea?

Posted by Jay Hancock at 9:00 AM | | Comments (2)
Categories: Taxes
        

Comments

Evidently, you're not much of a investigator: the information you seek is publicly available--most of the public's money is spent on health care--for the "disabled",elderly (i.e., Medicaid, Medicare,) and current/retired state employees.

Jay--Maryland's taxes are not that high compared to other states.

According to the Federation of Tax Administrators, in 2008 Maryland ranked 13th in tax revenue per capita. However, because Maryland residents have higher incomes than those in most other states, these taxes represented only 6.4% of individual income, ranking the state at 36 among the 50 states and the District of Columbia. The URL is here:

http://www.taxadmin.org/fta/rate/08taxbur.html

The last year for which both state and local figures are available was 2006. In that year, total "own source revenue" (which excludes federal transfer payments), placed Maryland at 48th among the states when expressed as a percentage of personal income. This figure is actually interesting, since it takes into account state revenue that is not considered a tax. Thus, Maryland, unlike say Delaware, has few toll roads. As a consequence of such non-tax taxes, Delaware's ranking in the "own source revenue" category is higher (meaning that there's a greater burden on its residents) than its "tax collection" ranking. In Maryland, the reverse is true.

Maryland total tax collections in 2006 place this state 31st among the states as a percentage of total income. The URL for that chart is here:

http://www.taxadmin.org/fta/rate/06stl_pi.html

The bottom line is that the meme that Maryland is a high tax state is simply baloney. Maryland has fairly low total taxes relative to other states. Further, because Maryland doesn't have "hidden taxes" (stealth taxes posing as user fees and the like), Maryland's total per capital economic burden, as a percentage of income from Maryland residents, is among the lowest in the country.

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Wednesdays and Fridays.
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