"local" taxes (sales, income, property tax)

[lapetiteruse]

So I just moved from LA and was updating my tax withholding. Hello surprise! Local income taxes. WTHeck is this???

Before I left LA I looked up the state tax rate for both VA and MD and then looked at DC as well. That came into play in my decision to live in MD. Now that I've discovered there's a local tax also, I'm actually paying $1000 more a year in taxes than saving $1000 a year. <facepalm>

Can someone explain the reasoning of the local tax as opposed to the typical sales tax and property tax most communities use?

[pcity]

Originally Posted by lapetiteruse

So I just moved from LA and was updating my tax withholding. Hello surprise! Local income taxes. WTHeck is this???

Before I left LA I looked up the state tax rate for both VA and MD and then looked at DC as well. That came into play in my decision to live in MD. Now that I've discovered there's a local tax also, I'm actually paying $1000 more a year in taxes than saving $1000 a year. <facepalm>

Can someone explain the reasoning of the local tax as opposed to the typical sales tax and property tax most communities use?

There's no "reasoning", really, and the local income tax isn't rare. It's common in other states like Pennsylvania and New York as well.

[goldenage1]

Originally Posted by lapetiteruse

Before I left LA I looked up the state tax rate for both VA and MD and then looked at DC as well. That came into play in my decision to live in MD. Now that I've discovered there's a local tax also, I'm actually paying $1000 more a year in taxes than saving $1000 a year.

Look at the positive: You are paying less in Maryland than you would pay in DC. Many other states impose a county or city tax on top of the state income tax rate.

Income tax is a broader-based tax than property tax. The other alternative of a higher sales tax would hit harder on the lower-income people. So, it is a compromise attempting to spread the burden.

[lapetiteruse]

I guess it just surprises me that taxes are higher in Maryland than they are in Los Angeles. The possibility of that never occurred to me... DC, sure, MD, not so much.

[nurider2002]

Oh yeah, Maryland is out of control with taxes. Which is why so many of us plan to escape as soon as we can.

[bufflove]

The tax burden for CA residents, on the whole, is substantially higher than you see in MD. However, CA's income tax, specifically, is much more progressive (i.e. the tax rate increases precipitously as income rises, while MD's tax is pretty close to flat). So if you have a low or moderate income then CA's tax structure favors you, but if you have a higher income then MD's structure is favorable. I've always found it odd how surprisingly regressive MD's tax bracket structure is, considering how liberal a state it is. I guess the answer is to start making more money. Easy peasy, right?

[Fundman]

You really have to look at the total picture. In some places there are city or county taxes but the state tax is lower. Or the state collects all the tax and then sends a percentage of it to the cities and counties. Or the income tax is low but then they make up for it with high property taxes.

[lapetiteruse]

I had lived in CA for 17 years, my entire adult life, so I never thought about it truly. And, I'm already working on that "make more money" philosophy, hence my move to DC for a promotion :-P

I'm definitely not complaining about taxes or my financial situation, just trying to understand the system here.

Thanks for all the input.