Tax burden weighing on Marylanders

December 02, 2000

Tax burden weighing on Marylanders

By LAURA ERNDE / Staff Writer

Brothers Russell and Charles Batt have lived parallel lives. Both retired from the military and became correctional officers at the state prison complex south of Hagerstown.

But one of them pays more income taxes than the other.

That's because Charles Batt, 60, lives in Hagerstown and Russell Batt, 63, lives in State Line, Pa.

When the two men compare their annual tax tab, Charles Batt always has a larger bill. Pennsylvania has a lower income tax rate and doesn't tax retirement income.

"It's not unfair. It's just the way the tax codes are written up in the two states," Charles Batt said.

But Russell Batt, who moved just over the border in Pennsylvania four years ago to avoid high Maryland taxes, said he can see a big difference.

"It's terrible the way the state of Maryland taxes, especially retirees. I was born and raised in Maryland, but, my god," he said.

High-tax state

Maryland has long had a reputation for being a high-tax state.

That reputation has driven some Hagerstown business people to buy homes in nearby Pennsylvania or West Virginia, said Suzanne Hayes, chairwoman of the Hagerstown-Washington County Chamber of Commerce.

It's impossible to do a full comparison of the tax burden in the three states because so much depends on exactly where you live and your particular situation.

Pennsylvania levies local taxes based not only on the county you live in but also your municipality or township and your school district.

But there are some big differences in the three states' tax structures.

Pennsylvania does not tax retirement income, and West Virginia gives tax breaks to those receiving pensions from the military, the state and the public schools.

If you desire to own land, West Virginia has the lowest property taxes.

If you do a lot of shopping, Washington County has the lowest sales tax, except when it comes to clothes. Pennsylvania doesn't tax clothing.

Most people don't base a decision on where to live based solely on their expected tax bill, said real estate agents and tax preparation specialists. Proximity to work and quality of schools are two of the biggest factors.

A sore subject

But taxes are a sore subject with many people, including Charles Batt.

In the early 1980s, before he and his wife, Phyllis, bought their home, they considered moving to Pennsylvania or West Virginia.

But they decided to stay in Hagerstown to be close to both of their parents, who were getting older and needed their assistance. Their parents have passed away, but Charles Batt, who retired last year, doesn't envision moving now.

"Now we're too old to move," he said.

Ronnie and Dottie Engle, both retired teachers, said they have too many ties to their Middletown, Md., community to leave.

"Money isn't everything," said Dottie Engle, 59. "My theory is you get what you pay for."

When she and her daughter went to Pennsylvania recently, they could tell they crossed the state line when the roads got bumpier, she said.

And West Virginia can't afford to pay teachers as much, which in her opinion leads to lower quality schools. But she thinks Eastern Panhandle residents will eventually pay more taxes for better schools.

"In the future they're probably going to have to get money, too," she said.

The tax burden

While conventional wisdom pegs Maryland as a high-tax state, some statistical comparisons give different results.

One comparison, which factors state taxes alone, shows that the tax burden for Maryland residents is not radically higher than for residents of neighboring states.

The U.S. Census Bureau takes the total amount of tax revenue collected by each of the three states and divides it by the number of people to get the per capita rate.

In 1999, the per capita tax was $1,833 in Maryland, $1,800 in Pennsylvania and $1,742 in West Virginia, according to the Census Bureau.

The Maryland Budget and Tax Policy Institute, a nonprofit and nonpartisan research organization, calculates state and local taxes paid as a percentage of personal income. Director Steven Hill says it's a good measure of tax burden because, in theory, people who earn more can afford to pay more in taxes.

In Hill's comparison, Maryland and Pennsylvania tax collections were equal to 10.6 percent of personal income in 1996, the most current year studied by the institute. In West Virginia, a poorer state, the percentage was 11.3 percent.

That doesn't mean the average West Virginia taxpayer paid 11.3 percent of his income in taxes. Some tax collections, such as sales and corporate tax collections, are paid by residents of other states.

Not unreasonable

As a Maryland lawmaker and member of the powerful House Appropriations Committee, Del. Sue Hecht, D-Frederick/Washington, has heard many times the complaint that Maryland is a high-tax state.

Her response: "You have to pay for it somewhere."

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