Maryland Loses Wynne Income Tax Case – Counties Brace for Impact

In the much-anticipated decision on the case Comptroller v. Wynne, the US Supreme Court has ruled that Maryland’s income tax system – specifically its application of county income taxes – is unconstitutional and must be altered to grant more credits for Maryland residents’ out-of-state income. This 5-4 decision likely carries a great fiscal consequence for Maryland’s counties – with some $200 million in tax refunds likely to accumulate, and an ongoing effect of $40-50 million per year.

MACo joined a multi-party brief, fighting alongside the Maryland Solicitor General, arguing that the state’s system of income taxes does not unfairly discriminate on income, and that states and counties have the right to tax residents for local services.

The Maryland Office of the Comptroller had prepared a summary of the case and its potential fiscal impacts prior to the final filings, which remains a relevant summary of the fiscal issues.

For more details on the case, see previous Conduit Street coverage:

With Income Tax Case Looming, State Adopts Follow-Through Plan
Wynne Income Tax Case Provokes Conversation and Questions at Supreme Court
U.S. Solicitor General Backs Maryland In Local Income Tax Case
Supreme Court Demonstrates Interest in County Income Tax

Full coverage of the case, including all legal documents and filings, is available at the SCOTUSblog website.

Michael Sanderson

Executive Director Maryland Association of Counties