Worcester Leads Md. In Incoming Taxpayer Migration

BERLIN -- Worcester has seen the greatest incoming migration of taxpaying citizens among all jurisdictions in Maryland, and subsequently the largest percentage of growth in the assessable income tax base, over a recent two-year period, according to an independent study released last week.

According to study released by Change Maryland, based on Internal Revenue Service (IRS) figures, more taxpaying citizens migrated to Worcester County over a two-year period from 2009 to 2010 resulting in the largest percentage growth in assessable income tax than any other jurisdiction in Maryland.

The inflow of 2,528 tax filers and their dependents into Worcester over the two-year period resulted in an increase in the county’s gross aggregate income of $72.2 million. While an almost in-kind number of tax filers and their dependents, 2,408, leaving Worcester over the same time period, resulted in a decrease in the county’s gross aggregate income of around $50 million, the net result is an increase in the county’s aggregate income of over $22 million, the highest level of increase in the state.

The $22 million increase, or 2.07 percent, represents largest tax base increase in Maryland during the study period. By comparison, neighboring Wicomico saw its income tax base decline by .77 percent.

While most counties in Maryland, along with Baltimore City, experienced an exodus in the number of tax filers, and a subsequent decline in their income tax base, a handful of counties on the Eastern Shore, most notably Worcester, saw their tax rolls increase, taking its assessable tax base with it.

“Clearly, Worcester County is a success story in an otherwise bleak picture around the state,” said Change Maryland spokesman Jim Pettit yesterday. “The positive migration Worcester experienced during the study’s time frame has resulted in the largest percentage increase in the income tax base of any county in Maryland.”

Simple geography is partly responsible for the migration of tax-paying citizens into Worcester. For example, the largest number of taxpayers migrating into Worcester came from Wicomico County with 317 individual tax-filers, or 570 when their dependents are added. The second largest group entering Worcester came from Sussex County, Del. with 103 individuals, or 171 when dependents are included.

However, the contributions to the tax base of Worcester by those taxpayers tell a different story. For example, the 570 filers and their dependents from Wicomico during the study period added $10.6 million to Worcester’s tax base.

By comparison, the 77 taxpayers who migrated to Worcester from Anne Arundel County, the third largest number, added $5.3 million to the county’s tax base. Even more pronounced, the 40 taxpayers who migrated to Worcester County from Montgomery County added $7.3 million to Worcester’s tax base. In short, 317 taxpayers from Wicomico added $10.6 million to Worcester’s tax base, while 40 from Montgomery contributed $7.3 million in new taxable income.

“When you look at the contributions to Worcester’s tax base from the migrations of certain other counties, the numbers are even more distorted,” said Pettit. “In most cases, far fewer migrations resulted in the largest contributions to the county’s tax base.”

Pettit said Change Maryland analyzed the migrations of taxpayers from one county to the other and determined a root cause for the pattern. Most of the highly populated counties in the center of the state, including Montgomery, Prince George’s, Baltimore County and Baltimore City, for example, experienced huge migrations, and consequently saw their income tax bases decline.

However, Worcester is one of the few success stories on the Eastern Shore and other rural areas of the state. Pettit said Change Maryland concluded the migration patterns of taxpayers from one county to another, particularly from the highly populated counties in the center of the state to the smaller, rural counties in Western Maryland and the Eastern Shore, including Worcester, is rooted in the tax-friendly policies of the recipient states.

“What we tend to see in the outlying, smaller counties is a viable two-party local government with more give and take on tax and spend issues,” he said. “The bigger, more populated counties are often dominated by a single party and have less give and take on tax issues. The result is a less tax-friendly approach in the larger counties.”

Pettit said the relative tax-friendliness of a county or jurisdiction is directly related to the migration patterns of taxpayers from one county to another.

“People tend to vote with their feet,” he said. “If they get taxed enough, they’re going to move to a more tax-friendly location. That’s why we believe Worcester and some of the other counties are seeing positive growth in their tax base. Clearly, there’s a pattern with Montgomery and Baltimore, for example, where people are leaving those counties.”