Tax Reform Needs To Rain Down On Maryland

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On Tuesday, Maryland Governor Larry Hogan unveiled legislation that fulfills his campaign promise to repeal Maryland’s “rain tax.” Currently, the state requires its largest jurisdictions to charge fees for stormwater clean-up.

Yes, you read that right: Maryland literally places a tax on the amount of rain that falls. It’s the only state in the nation to do so, and tax-reform-minded leaders like Governor Hogan rightfully find it outlandish.

Environmentalists are concerned about polluted stormwater entering the Chesapeake Bay, and those concerns are valid. But Governor Hogan contends that arbitrary taxation is not the solution to an environmental dilemma. His legislation gives the power back to local officials, so that they can decide how to fund such required programs as stormwater management.

“Repealing the rain tax has nothing to do with our commitment to the bay or our desire to control stormwater management,” Hogan said. “It has everything to do with my belief, and the overwhelming majority of Marylanders’ belief, that the state should not be forcing counties to raise taxes on their citizens against their will.”

“The rain tax was the straw that broke the camel’s back and it ignited a tax revolution in our state,” he added. Hogan considers the rain tax a “universally despised” tax that made Maryland a national laughingstock.
Governor Hogan knows that a variety of tax cuts must be made to keep Maryland competitive. As my co-authors and I discuss in An Inquiry into the Nature and Causes of the Wealth of States, under the leadership of former Governor O’Malley, Maryland became one of nation’s chief culprits in raising taxes ever-higher.

What’s more, Maryland lost $7.27 billion in net adjusted gross income between 1992 and 2011, and consistently loses wealthy individuals to other states. Maryland’s average outbound migrant over the 19-year time period studied had an average adjusted gross income of $48,950, while the average inbound migrant earned just $44,329. Additionally, Maryland’s punitive tax environment led to the state being ranked as the 11th-worst in the nation by the nonpartisan, nonprofit Tax Foundation.