1930s - 1940s

Maryland
became

the first state in

the nation to

mechanize tax

processing in

1940, using IBM

punched card

machines.

In 1940,

a hot dog

and soda

cost about 15 cents.

Real incomes in
Maryland rose
an average of
50% during the
war years.

Maryland's income tax ap-
peared at a time when Maryland-
ers sorely needed the revenue.

The lingering Depression of
the 1930s prompted Maryland's
legislature to pass several social
and welfare laws to ease hard-
ships. To increase revenue,
Maryland's state income tax was
proposed by a state constitutional
amendment 60 years ago in 1937.
The Maryland legislature enacted

Hundreds of thousands of Maryland workers like Ethel Smith, Margaret
Russell and Ruth Smith helped to build the Allied defense arsenal - and
Maryland's revenue picture - during World War II. Photo courtesy of the
Maryland State Archives, News American Collection, USA SC 2117-383

the first state income tax law two
years later.

During the first filing sea-
son, 110,240 taxpayers paid ap-
proximately $1 million in state
income taxes. The average bill:
$9.92.

Income tax revenues in-
creased tenfold by the time
America entered World War II,
reaching $10.4 million in fiscal year

1942.

2

During the war years, Mary-
land industries like Bendix, Glenn
L. Martin and Westinghouse mar-
shalled armies of workers to build
everything from delayed-action
fuses to B-26 bombers.

The State Comptroller's
Office lent a hand to "Rosie the
Riveter" in 1943 by opening its first
taxpayer service field office in
Dundalk, near the Baltimore ship-
yards where skilled employees
cranked out
Liberty ships
and other sea
vessels for the
Allied cause.
In 1947,
faced with a
desperate need
for revenue to
pay for services
and projects
delayed by the
war, the Gen-
eral Assembly
imposed a 2%
tax on retail
sales. The new
sales tax re-
quired the
comptroller to
develop detailed regulations,
identify hundreds of taxable items
and issue 49,507 licenses in the six
weeks before the July 1,1947
effective date.

The sales tax exceeded its
first-year estimates by generating
$23.6 million and eventually be-
came the state's second largest
source of general fund revenue.