A D.C. Council member on Thursday offered appreciation for Maryland’s tax increases, saying they made the District look better by comparison, igniting the wrath of Maryland leaders seeking to bolster the state’s credentials as a place to attract big business.
“Thank God Maryland keeps raising their taxes,” Ward 2 D.C. Councilman Jack Evans said in a committee meeting while discussing corporate tax rates. “One of these days they’re going to catch up to us.”
Evans pointed out that Maryland’s 8.25 percent corporate tax rate is creeping up on the District’s 9.975 percent rate, which is the highest in the nation besides Pennsylvania’s.
| Tale of the taxes |
| District |
| Income (top): 8.95 percent on income greater than $350,000 |
| Sales: 6 percent |
| Corporate: 9.975 percent |
| Maryland |
| Income (top): 5.5 percent on income exceeding $500,000 |
| Sales: 6 percent |
| Corporate: 8.25 percent |
| Virginia |
| Income (top): 5.75 percent on income exceeding $17,000 |
| Sales: 5 percent |
| Corporate: 6 percent |
Maryland Republicans pounced on Evans’ remarks, saying the unlikely messenger affirmed the notion that Old Line State lawmakers have adopted a “tax-and-spend” mantra.
“Much to my chagrin, I’d have to agree with Councilman Evans,” said Maryland House Minority Leader Anthony O’Donnell, R-Calvert County. “Maryland is increasingly perceived as a state that’s hostile to business. When you have D.C. of all places poking fun at you, it’s pretty bad here.”
Maryland and Virginia — and their governors with aspirations for higher political office — have long tussled over which side of the Potomac has fostered a better environment for economic growth.
The two states took starkly different approaches to closing budget gaps this year, with the Old Dominion relying almost entirely on spending cuts and Maryland lawmakers pushing for a multimillion-dollar package of new taxes.
But Thursday, O’Malley’s office was fighting back against tax jabs from a fellow Democrat.
“The councilman clearly doesn’t have the full picture; a jurisdiction or state’s corporate income tax does not translate into prosperity and success,” said O’Malley spokeswoman Raquel Guillory, noting Maryland’s lofty education rankings, sterling credit rating and recent job growth. “Can the councilman claim any of this?”
And when told of Evans’ portrait of Maryland, a top official in the Washington suburbs called the remarks “inappropriate.”
“I don’t think that you enhance the region in terms of its competitiveness and the District by making negative comparisons to other districts,” said Montgomery County Executive Ike Leggett. “I hope that he does not mean to cast a negative dispersion on Maryland.”
The District taxes all income above $40,000 at 8.5 percent and income above $350,000 at 8.95 percent. In comparison, Maryland’s top income tax rate is 5.5 percent for those making at least $500,000 annually. The General Assembly had planned to raise tax rates but ran out of time to vote on the budget before it adjourned.
O’Malley would like to call a special session but said he won’t do so until the House of Delegates and Senate agree on a blueprint. O’Donnell and his fellow Republicans have railed against a special session, saying it would merely serve as a vehicle for Democrats to sneak additional taxes into the budget.
Maryland’s and the District’s 6 percent sales taxes slightly exceed the 5 percent rate in Virginia. However, O’Malley has pushed this year for another percentage point on the state sales tax to raise funds for transportation projects.
Examiner Staff Writer Liz Farmer contributed to this story.
