A progressive national think tank has released a report arguing that raising personal income tax rates on individuals with the highest incomes may be the best way to generate revenue for public investments – and cites Maryland as a prime example.
The study published by the Center on Budget and Policy Priorities, reviewed the work of policymakers in several states to garner and strengthen support for public investments “crucial to state economies and residents’ well-being.” The study highlighted Maryland, where it found that a “millionaires’ tax” has proven to be beneficial.
In 2008, the millionaire’s tax was passed in the state, which raised the income tax rate for millionaires to 6.25 percent.
Since Maryland enacted the tax—one of 12 states to do so—it has seen higher growth of the gross domestic product in the private-sector than other states in the same region. Maryland’s GDP grew by 19.2 percent since the tax was enacted, compared to 14.8 percent for the rest of the Mid-Atlantic region, according to the report.
However, Maryland was only slightly better than its neighbors in the categories of average income and job growth.
Yet, despite the initial fears of millionaires leaving the state, a 2018 survey found that Maryland has the highest concentration of millionaires in the country. This population has allowed the state to designate resources to several public investment projects, including preventing $400 million in cuts to state schools, police and other public services, the report argued.