Whether In A County or the Country, Higher Taxes Spell Trouble
Aleksey Gladyshev /
Raising taxes does not mean more overall revenue, recently seen in Montgomery County, Maryland, which has had a particularly bad fiscal year after a recent tax hike. The county, which is just across the northern border of the District of Columbia, saw many residents making over $1 million move out when a tax hike was introduced in 2008, and now there are not enough high-income residents in the county to pay their share of taxes. The result of the high tax flight? The county now runs a budget deficit.
The drop in revenue was not entirely due to the recession but rather to unfortunate fiscal policy that drove away the highest earners in the county; Montgomery officials said that after the increase in taxes, the tax revenue dropped 13 percent between 2008 and 2010, while actually rising 40 percent before the tax increases, in 2005 to 2007.