Six states have a more favorable business tax burden than Maryland, according to a report released in May by the Anderson Economic Group.
The report found that this state’s business tax burden is 8 percent, two percentage points lower than the national average.
OK. What does that mean?
- That 8 percent is the estimate of 11 different state and local taxes paid by Maryland businesses compared to those businesses’ before-taxes operation margin. (What Anderson calls a business’ “ability to pay these taxes.”)
- Another way the report defines it: the 8 percent is the “share of pre-tax operating surplus.”
The metric is a bit deceptive. Maryland businesses, for instance, paid about $8.7 billion in taxes during FY 2011, which is several billion dollars more than the roughly $4.8 billion Delaware (the state with the most favorable business tax burden) and Washington, D.C., (which is not among the 10 with the lowest tax burdens) combined.
But notice the ratio is the estimate of state and local taxes paid to businesses’ ability to pay the taxes. In terms of total amount of taxes paid by businesses for FY 2011, there are 28 states where businesses paid less in taxes compared to Maryland.