Washington-area business owners’ tax burden mounts as economy rebounds
A rebounding economy means more customers, higher sales and new jobs. It also means higher taxes.
State and local tax bills for companies across the country grew modestly last year as the economic recovery accelerated, according to new research released last week, and Washington-area firms were no exception.
Companies in the District, Maryland and Virginia collectively forked over $10 billion in state and local property taxes last year, up from $9.6 billion in 2012 — year-over-year growth of 4.2%. But the apparent bounce back in property values isn’t doing nearly as much to inflate state and local tax revenues in Maryland, where property taxes amount to barely more than a fifth of companies’ tax bills.
“What’s happening in Maryland is that so much of their property, especially the tax base surrounding the D.C. area, is owned either by the government or by non-profits, which don’t pay property taxes,” said Douglas Lindholm, executive director of the Center on State Taxation.
The recent rebound in business tax revenue cannot all be attributed to the recovering real estate market. Business incomes also appear to be on the mend, according to the data. Companies in the region reported state corporate income taxes of $2.3 billion, up from $2.1 billion in 2012.
A similar study by the U.S. Chamber of Commerce earlier this year showed that Virginia had lower state and local business taxes and an overall better business tax climate than Maryland. The District wasn’t evaluated in the study.
Meanwhile, small businesses in the Washington region seem to be faring better and thus paying more state and local taxes, according to the recent study. Business taxes paid as personal income taxes by small business owners — the pass-through structure by which most small firms are organized — in the District, Maryland and Virginia surged 20% last year to $2.4 billion, a much faster rate of growth than overall business taxes.
Source: washingtonpost
