Op-ed: Maryland Tax Structure Creates State and Local Fiscal Challenges

In an opinion piece for Center Maryland, Greater Baltimore Committee (GBC) President and CEO Don Fry discusses Maryland’s tax structure, its fiscal challenges, and an approach to address them.

While the reasons for a state regularly spending more than it takes in can be complex, the evidence is compelling that the root of what is now a chronic fiscal imbalance is Maryland’s current tax structure, which is largely derived from the state’s tax structure that was developed in the 1940s.

Mr. Fry indicates that these challenges apply to the local level as well.

Not only are elements of Maryland’s tax structure major factors in the state’s poor ranking in a number of national business climate reports, but property taxes in our state’s local jurisdictions appear to be problematic. The Tax Foundation ranks average property taxes on homes in Maryland’s local jurisdictions the 11th highest in the nation. Maryland property taxes as a percentage of homeowner income rank 19th highest.  For property taxes as a percentage of home value, Maryland ranks in the middle at 25th highest.

There are those in Annapolis who contend that local jurisdictions have some room to generate more revenue. But generally at both the state and local levels Maryland’s revenue sources, as currently structured, appear largely pushed to their reasonable limits when it comes to funding government operations.

The GBC believes that tax reform should be a top priority for Maryland’s next administration.

The goal of such reform should be to achieve sustainable long-term government revenue growth without damaging the business climate and without state leaders needing to habitually increase tax rates.