ROCKVILLE, MD--The Montgomery County Council has just approved a recordation tax that is the highest level of funding ever provided by the council, according to a column written by real estate attorney Harvey S. Jacobs.

The tax, which will generate $383 million, will finance school construction, affordable housing and a county administration building renovation, but it is $234 million more than the County Executive Ike Leggett requested in his budget and more than the Board of Education requested, according to Jacobs.

It is also another indicator that Montgomery County is an expensive place to live -- even though property values are higher, generally speaking, in the District.

The Largest Tax Burden

That matters to employers as they decide where to locate in the Greater Washington DC area, according to a recent CBRE analysis.

It found that while the District has the highest corporate tax rate and real estate costs -- that is, rents and commercial property tax rates -- in the metro area, Montgomery County takes the lead in terms of an aggregate tax burden for residents.

CBRE concluded this after analyzing total income, property and car taxes across the District and the counties of Arlington, Fairfax and Montgomery County. A family with an income of $100,000, a house worth half a million dollars and a car assumed to be valued at $15,000 is taxed most heavily in Montgomery County, it said.

CBRE conducted this analysis before the vote to raise the recordation tax was passed.

According to CBRE:

Despite higher overall property values in the District of Columbia, residents on average pay less real estate tax than homeowners in other counties. The District has the lowest residential property tax rate of 0.85 for every $100 of assessed value, versus Fairfax residents who pay the highest rates of 1.13.

Despite lower state income taxes, MoCo's county taxes tip the scales against it. Montgomery County levies an additional flat rate county tax of 3.2%. Arlington and Fairfax, while not levying a county tax, charges residents an annual car tax. Sales taxes are almost identical in the three jurisdictions from 5.75% - 6%.

Talent Availability Drives Site Selection Decisions

Increasingly, employers are taking such issues into account, Revathi Greenwood, director of Research and Analysis at CBRE told GlobeSt.com.

That is because talent availability now tops commercial real estate and tax costs as a key decision driver for companies' location strategies, according to the CBRE analysis.

“This implies that, for any tax analysis, a more nuanced analysis of personal and property taxes that affect the location decisions of talent is required,” the report concluded.

For example, a company trying to decide where the best place to locate to attract Millennial talent might assume that the District is too expensive for them. But, Greenwood said, the notion that DC is too expensive is balanced out in the larger picture about overall costs and commute time.

Instant Insights /

Uh Oh Montgomery County. Workers' Local Tax Burdens Matter to Companies

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