While politicians in Washington debate the impact of tax increases on economic growth, an interesting experiment is shaping up in the surrounding suburbs.
With Maryland Governor Martin O'Malley shepherding another tax increase through the legislature last week, even Democratic politicians in the state's wealthy Montgomery County have begun worrying that higher-income earners will flee across the Potomac to lower-tax suburbs like Fairfax County in Virginia.
Delegate Benjamin F. Kramer from Montgomery County recently told The Washington Post that he worried about a tipping point. “I’m concerned there’s a lack of understanding about the implications. Are we making Montgomery County uncompetitive with Fairfax?"
According to numbers that The Wall Street Journal provided in an editorial today, the answer appears to be yes. Here's an excerpt:
A family of four earning $250,000 a year will be able to save money by moving to Washington, D.C., arguably the most liberal city in America. The same family can save $6,000 a year by relocating across the Potomac River to Virginia, where the top tax rate is 5.75%, according to the Tax Foundation.