Spurred by a tax study from its neighbors in the District, the county’s Department of Economic Development will now try to prove perception is not reality with its own in-depth look at how taxes affect a business.
Economic Development chief Steve Silverman on Monday announced the county has commissioned a tax competitiveness study in conjunction with the rebooted Montgomery Business Development Corporation.
“Nothing is more effective than facts in knocking down widely-held and stubbornly false perceptions,” read the announcement, which is also on the DED website.
The study mirrors a September report from the D.C. Tax Revision Commission that creates a sample corporation with $30 million of total revenue, $2.4 million of income before taxes and a single location. The D.C. study shows the corporation would actually pay less in taxes in Montgomery than in any nearby jurisdiction, even rival Fairfax County.
You can read the report here or more about it in the Washington Business Journal, but the gist of it is the “overall tax burden” isn’t that bad in Montgomery, at least in the context of the fictitious corporation.
The overall tax burden looks at how the combination of every tax and levy affects tax rates. The county’s area-low overall tax burden comes out at $216,378, about 18 percent or $50,000 less than the $264,424 overall tax burden in Arlington.
“Most people don’t have the tools to evaluate the overall tax burden,” Silverman said. “So they tend to focus on individual taxes. A number of factors go into determining that overall tax burden, including the type of company, the number of employees it has, any tax credits it might be eligible to receive — any number of variables, in fact. Any time you compare apples with oranges, your results are going to be skewed.”