Thursday, August 29, 2013

In Maryland, Welfare Increases and Taxpayers Leave

Two reports one, from the CATO Institute, the other from the Tax Foundation show that in Maryland welfare benefits have increased while taxpayers have fled.

In their study The Work Versus Welfare Tradeoff: 2013, CATO scholars Michael Tanner and Charles Hughes calculated state-level welfare benefits, and found that in Maryland a welfare recipient is eligible to receive benefits totaling $35, 672, an increase of $6,200 since 1995. That ranks Maryland 10th highest in the nation.  

Tanner noted, in a Baltimore Sun oped that to make her family better off than that, a mother of two would have to earn more than $18.35 per hour. 

Tanner and Hughes conclude that people taking advantage of these welfare benefits are acting rationally to the incentives provided by policy makers, which make welfare more attractive than work.

Taxpayers are rational actors as well and they respond to incentives—and disincentives.  The Tax Foundation published a map showing migration of personal income between the states from 2000-2010.  Maryland ranked 43rd, losing $5.5 billion in net adjusted gross income.  Maryland taxpayers see the low income tax (in some cases no income tax) burden of other states and leave, taking their money with them. 

Not coincidently Maryland’s chief source of revenue comes from the state income tax.  Another Tax Foundation map shows Maryland ranks second in the nation for income tax as a percentage for all state and local revenue.

The migration numbers suggest that it's not just the rich leaving for easier tax burdens, but the middle class as well, much like all the ex Californians, these former Free Staters are refugees from Maryland's war on itself. 

The term "One Maryland" is a typical trope in Governor O'Malley's rhetoric.  However, under his policies and that of the state's one-party Democratic rulers, that are causing the exodus, we are seeing an increasingly bifurcated state--Two Marylands--the very rich and the very poor.  


Jerry Johnson said...

OweMalley is a Douche

dwb said...

the analysis cato did is excellent, as is the interactive map that shows where people are going to/coming from. It's only through 2010. Bet you lunch at mortons that after the Big Gun Grab and elimination of the death penalty, the trend accelerates. Unfortunately, that just makes it that much harder because the people who stay think Maryland is on the right track, and genuinely believe Maryland wont end up like Detroit. I just don't see how Maryland can tax or grow its way out of debt and unfunded pensions liabilities. Hard to see my self and my wife staying once the kids are in college without a major change of direction.

Bruce Godfrey said...

When you consider that Oregon, which is #1 on income tax and has a rather stiff 9% rate starting at $15K in taxable income for a couple, has no general sales tax whatsoever, the fact that we have a 6% sales tax and are second highest for income tax revenue proportion is simply shocking.