Maryland’s State Economy

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Maryland’s economy has an interesting history, much like the state. As one of the original thirteen colonies, it relied heavily on the trade of tobacco with England, British Colonies, and other parts of Europe. After the Revolutionary War, Maryland almost went bankrupt as a result of losing England as a trade partner (“Maryland’s Economy”). Since the 18th and 19th century, Maryland’s economy has been booming after it turned to farming wheat, corn, crabs, oysters and fishing (“Maryland’s Economy”). According to the US Department of Commerce, the gross domestic product (GDP) of a state is how much money the state makes by selling their products. Maryland’s GDP is ranked 15th in the U.S. pulling in around $399 million in 2017 which is a result of finances, trade, educational services, professional services, and a few other industries.

Ohio’s GDP, on the other hand, is 38% larger at $645 million in 2017; this is approximately $246 million more than Maryland’s. Ohio’s GDP is ranked 7th in the US. Ohio has more agricultural output than most East Coast states and results in more money earned as well as a larger state population. The per capita personal income (PCPI) is how much a person earns on average in a specific state. For the state of Maryland in 2017, the PCPI was $60,847, ranked 5th in the US, and an increase by 3.6% over the previous year (US Department of Commerce). Ohio’s PCPI is $46,732 which is ranked 29th and significantly lower than Maryland’s by $14,114 (US Department of Commerce).

As reported by the US Bureau of Labor Statistics, Maryland’s unemployment rate as of July 2018 was 4.3% and by December of 2018 was down to 3.9%. For comparison, the national unemployment rate was 3.9% in July of 2018. After fluctuating by only 0.1% over the six month period, it ended the year at 3.9%. Ohio’s unemployment rate was consistently 4.6% from July to December of 2018. That is 0.3% higher than Maryland’s in July and 0.7% higher in December. But in 2017, they only had a 1.6% increase which is less than the US and Marland by 0.6%. As stated in “Maryland Tax Rates and Rankings”, the individual income tax rate in Maryland is 5.75%.

The state and local individual income tax collections per capita is $2,200 which is ranked number three in the US. The corporate income tax rate, which is a tax that businesses pay based on their profits, is 8.25% and the sales tax for the state is 6.00%. Maryland’s gasoline tax rate is 33.8 cents per gallon, ranked at number 16 (number 1 being the highest), and the state cigarette tax rate is $2.00 (dollars per 20 pack), ranked at number 14. Ohio, on the other hand, has a 4.997% individual income tax which is 0.753% lower than Maryland’s (Ohio Tax Rates and Rankings).

The state and local individual income tax collections per capita is $1,186 (ranked 16th) and is $1,014 lower than Maryland. Ohio doesn’t have a corporate income tax rate and sales tax in Ohio is 5.75% which is 0.25% lower than Maryland. The state gasoline tax rate (Ohio) is 28.01 cents (ranked 29th) which is 5.79 cents lower than Maryland. The state cigarette tax rate is $1.60 (ranked 25th) and is 40 cents lower than Maryland. Based on these the gasoline and cigarette tax, it would be cheaper for people to live in Ohio who use a lot of gas and smoke. The individual income tax and sales tax are also lower in Ohio and means that the cost of living would be cheaper than Maryland’s.

To consider Maryland’s economy attractive or competitive, there are many factors to take into consideration. First, the individual income tax in Maryland is much lower than several states such as Ohio, California, Orgen, and several others (Scarboro). While the individual income tax isn’t the lowest of the 50 states, it makes Maryland attractive because it is lower than most of the large states.. The PCPI is also higher in Maryland higher than the national average at $51,640 (“Maryland”). This makes Maryland really attractive to people looking for jobs because people are more likely to look for a job where they know the average pay is going to allow people to earn more money and not have to pay as much for taxes and other expenses.

One of the downsides of Maryland’s economy if the corporate income tax. 44 states in the US have corporate income tax and Maryland’s tax falls towards the higher end of the scale (Scarboro). This tax could be very detrimental to the economy because if companies such as Amazon are looking to open a new data center in one of the fifty states, they are more likely to go with a state such as Ohio who doesn’t have corporate income tax to save the company money. This makes Maryland less competitive. This could also cause the state to lose money from a lack of businesses that want to move into the state for that reason. At the end of the day, Maryland’s economy is more beneficial and attractive to people than companies because it had a high PCPI, lower taxes, and a lower unemployment rate.

Cite this paper

Maryland’s State Economy. (2021, Jul 17). Retrieved from https://samploon.com/marylands-state-economy/

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