August 30, 2010

Analysis: Ehrlich, O’Malley earn more than 98% of Maryland residents

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By Len Lazarick
Len@MarylandReporter.com

Now that we know that the two main candidates for governor make more than 98% of Maryland households, we can get on with the business of what they will do for the rest of us.

The tax returns released by ex-Gov. Bob Ehrlich and current Gov. Martin O’Malley over the weekend showed that Ehrlich was a man of his word, as the O’Malley radio ad portrayed: “We made money, for us, a lot of money.”

At the bottom of the page is an imperfect year by year summary of their tax returns. It is based on hand-written notes other reporters and I collected as we scanned what we were told were copies of the tax returns for Bob and Kendel Ehrlich for the last five years, and Martin and Katie O’Malley for the last three years.

On the plus side, this was the first time that this has happened in a Maryland election campaign that anyone can recall. On the national level, candidates have been releasing tax returns for a while. Brian Witte, State House correspondent for the Associated Press, asked for the returns here.

It was good that we saw the returns, but bad that we couldn’t have the copies that would have made the reporting more accurate and allowed us to share the returns with the citizens and the tax professionals that could have analyzed them further.

The O’Malley campaign said they may have actually released copies of the returns if the Ehrlichs had. Instead they did give us more detail on the much simpler O’Malley forms – work sheets and W-2s.

Top 2% of filers

The O’Malley spin was that Ehrlich’s returns, filed jointly with his wife, showed him “out of touch with the needs of working families.”

According to figures from the comptroller’s office (p. 11), the Ehrlichs are in the top 1% of Maryland households with incomes topping $800,000 the last two years.

The O’Malleys make more than $300,000 per year, almost entirely funded by taxpayers. They’re in the top 2% of Maryland earners, and earn more than four times more than what half of households in Maryland make, where the median income is $70,482, according to the U.S. Census.

TAXES: Ehrlich’s form show the couple actually paid more taxes than the O’Malleys made in two of the years. And in 2008 and 2009 their state taxes got a bump when the tax rate for their bracket went from 4.75% to 5.5% due to the increases signed by O’Malley in 2007. That tax increase made the O’Malleys pay more, too.

Overall, the Ehrlichs paid about 34% of their income toward federal and state taxes, and the O’Malleys paid about 30%.

CHARITY: In 2008, the O’Malleys gave 1.1% of their income to charity, below average for their income level, but saw a major bump in 2009 when the governor returned a chunk of his $150,000 salary to the state as a donation in solidarity with the state employees he had furloughed. The Ehrlichs gave about 1.8% of their income to charity, about average for people making over $150,000, according to one source on charitable giving. (Interestingly, people in the Northeast United States give a lower percentage of their income to charity than the rest of the country.)

PENSIONS: After eight years on the Baltimore City Council and seven years as mayor, O’Malley, who is 47, collects a $60,000 a year pension from the city for the rest of his life. A small portion of that pension is money O’Malley contributed to the plan.

Regardless of what happens in the election, based on one-term as governor, both Ehrlich and O’Malley may start collecting a pension at age 55 of $50,000 a year, one-third of the annual salary. If either serves a second term, he will receive $75,000 a year as a pension, half the annual salary.

Ehrlich is also entitled to pensions based on his eight years as congressman and eight years in the House of Delegates.

The most detailed story about both sets of tax returns is by the AP’s Brian Witte.

John Wagner of the Washington Post reports, as does Annie Linskey of the Baltimore Sun.