Our story last week on a national study, “Tax flight is a myth,” produced more reader comments than any we’ve posted this summer. Some supported the study’s conclusion, but most scoffed.
One of the comments came from Frederick County businessman Mark Gaver, for whom fleeing from Maryland taxes is now a personal reality. Gaver is the owner of GTI Federal, an IT provider to federal agencies, and of Gaver Holdings, a real estate company.
Gaver, 50, and his wife bought a home in Bonita Springs, Fla., in 2009, and have been staying there eight months out of the year. He will make the residence change permanent in October. He is also considering moving his 75-employee GTI to Florida as well, where it recently picked up a contract with NASA.
The move is not taken lightly. Ten generations of Gavers have lived in Frederick County since 1762; his wife’s family has lived in Maryland for eight generations.
“The move is primarily to get out of the cold weather, but the tax benefits are certainly substantial,” Gaver said in an interview.
Gaver earns about $750,000 a year. With state and local income taxes his top marginal rate comes to 8.5%. That’s more than $60,000 in taxes per year, a little less than the total income for half of Maryland households.
Gaver’s father was career Air Force, and “I am the first person in my family to have significant financial success. … I’m being punished for that financial success.”
The state and federal government seem hell bent on redistributing wealth, he said. A family member who works for him makes a bit above $40,000 per year. A single mom, she paid $4,800 in federal withholding taxes last year, but got a refund of $6,900 with the earned income tax credit that means half of U.S. households pay no income tax.
“I don’t mind paying my fair share,” Gaver insists. “I don’t think the state of Maryland cares to keep people like me here.”
“I don’t think the state of Maryland cares to keep people like me here”
When he moves, he points out, the loss will not be just to the local economy, but to the civic wealth of Frederick County. He and his wife give “a couple hundred thousand dollars a year” to local charities, and he’s already begun re-targeting some of that to Florida. He said the state of Maryland will look at his “charitable intent” in assessing whether he really, truly has made his permanent abode in the Sunshine State.
“I’m the kind of guy that the state of Maryland will come after,” Gaver said. He said he knows of three other Maryland businessmen who have moved to his area to the Gulf Coast. There are now several direct flights a day from BWI to the Fort Myers airport near his new home.
The Center for Budget and Policy Priorities and the Maryland Budget and Tax Policy Institute insist that an analysis of the data shows the large numbers of high-income folks do not move when taxes are raised. But last week’s study does not look at the total tax burden they often complain of, along with Maryland’s heavy-handed regulatory climate. “I think they’re kidding themselves,” Gaver said.
As John Brown from the Eastern Shore said in a comment on the original tax flight story, “If the studies are true, why is my farm now surrounded by people from New Jersey who are flee[ing] high taxes?”
Advocates for higher taxes to pay for maintaining and increasing social services say this is all “anecdotal,” but the anecdotes pile up.
I first ran into this phenomenon 14 years ago when I was between journalism jobs and doing some writing for a Maryland businessman with operations in Florida. It turned out he had already established permanent residency in Florida, and kept track of the days he needed to stay there. He said the move saved him $100,000 a year. I did the quick math, and realized he was making over $1 million a year.
I still see him occasionally in Maryland, where he remains active in business and civic affairs, and even is a substantial donor to local charities (unfortunately not to MarylandReporter.com).
Most of these folks will admit they like Florida for the balmy weather in the winter, but as Gaver said, the tax benefits are substantial. They can eat out by the pool on their screened patios in January, and save more money than half of Marylanders make in a year.