by

Michael J. Horney 

The Tax Foundation released its 2015 State Business Tax Climate Index on Tuesday. Unfortunately, Maryland has not improved its ranking since the 2014 index came out. (See this press release.)

Maryland ranks 40^th in overall business tax climate for the second year in a row. The index also ranks Maryland at 16^th in corporate tax structure, 45^th in individual income tax structure, 8^th in sales tax structure, 41^st in property tax structure, and 21^st in unemployment insurance tax structure.

Free State Foundation scholars have written many times in the past, including several times this year, about how Maryland's perennially high tax rates have led to businesses and residents moving out of the state (see here, here, and here). The Tax Foundation's 2015 index provides additional evidence for why businesses might leave the state as Maryland's neighboring states (Virginia, West Virginia, Delaware, and Pennsylvania) all rank higher. (See the chart below.)

Taken from a previous FSF blog:

"It is not just businesses possibly migrating into Virginia or other neighboring states that should be of concern. Businesses that remain in Maryland could be operating more efficiently if [tax rates] were lower."

It is important that Maryland's governor and legislators act to lower tax rates across the board. This would attract new businesses and encourage entrepreneurial activity and innovation - and serve to retain businesses that otherwise might move away from Maryland. These changes to the tax code would quickly improve Maryland's business climate and, in doing so, stimulate more start-up businesses, skilled employees, investment, and consumer spending.