O’Malley blog rebutting exodus report causes stir

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Maryland Gov. Martin O'Malley’s office took a swipe at a grass-roots citizens’ group over a report claiming people are leaving Maryland for Virginia, beginning a fight in cyberspace between the governor, the citizens’ group and an established nonpartisan tax research organization.

The conflict began last week when the nonpartisan grass-roots organization Change Maryland published a report analyzing tax data from the Internal Revenue Service. According to the report, which looked at where taxpayers move, many Marylanders relocated to Virginia from 2007 to 2010, resulting in a $390 million loss in tax revenue.

On Tuesday, Rick Abbruzzese, director of public affairs for the Democrat governor, posted an item challenging Change Maryland’s report called “The Facts” on the governor’s blog. In the post, Mr. Abbruzzese used information from the Phoenix Institute, Ernst & Young, Council on State Taxation, and the Tax Foundation to poke holes in Change Maryland’s report.

Change Maryland is described in the blog post as a Republican, partisan group, founded by an appointee of Republican former Gov. Robert L. Ehrlich Jr., “a failed congressional candidate and failed would-be candidate for governor.”

Change Maryland Chairman Larry Hogan called the post on the governor’s blog childish.

“Not only did he provide wrong information and misstate information and told things that were not true on the state website, he lashed out in a petty way,” Mr. Hogan said.

Mr. Hogan wasn’t the only one who had problems with the blog post. The Tax Foundation, a nonpartisan tax research group based in the District, also took issue with the post, saying it misrepresented the group’s facts. The foundation responded with a blog post of its own, titled “Maryland governor misstates state tax comparisons.”

“We take a lot of pride in giving accurate information,” said Scott Drenkard, an economist at the Tax Foundation.

The post on the governor’s blog claimed Maryland has the highest percentage of millionaire households in the country, the third-lowest income-adjusted tax burden, the ninth-lowest adjusted sales tax, the eighth-lowest tax burden on mature businesses and the 12th-lowest tax burden on new investments.

The Tax Foundation’s website disagreed, saying the state’s full tax structure - including sales, corporate and personal income taxes - puts Maryland “near the bottom of the heap for tax system competitiveness as a whole.” Maryland sales taxes “are, at best, middle of the road.”

“Don’t lose sight of the fact that this is cherry picking data,” the blog post states.

While the Free State does have the eighth-lowest tax burden on mature businesses according to Tax Foundation studies, the post states it has the 46th-worst for new ones according to the foundation’s “Location Matters” study.

Maryland has the 16th-highest state sales tax, according to the foundation.

The foundation also challenges a table the governor’s blog post included of nearby state sales taxes. The post says the governor’s blog overstates Pennsylvania’s local tax rate, excludes Delaware’s lack of sales tax, and mistakenly said Virginia’s sales tax is 6.5 percent.

“I live and shop in Virginia,” Mr. Drenkard said. “It’s 5 percent everywhere.”

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