Most states have improved their financial condition coming out of the recession and so new taxes are generally off the table this year. Then there's Maryland. Here's another case of a failed tax increase on "millionaires."

Democratic Governor Martin O'Malley has acknowledged another $1.1 billion deficit for 2013 thanks to a $35.9 billion budget with about $400 million for new school construction, roads and transit. To close the budget gap and help plug a $16 billion unfunded liability in public-employee pensions, Mr. O'Malley is seeking to raise $180 million by reducing income-tax deductions and exemptions for those earning more than $100,000. This is Maryland's new definition of "rich."

Mr. O'Malley also wants to raise taxes on tobacco, nursing homes, Internet sales, water and sewers. One of his biggest revenue grabs is a proposal to apply the 6% state sales tax to gasoline, which over three years could raise the tax by 18 to 24 cents a gallon, up from 23.5 cents now.

If tax increases solved budget problems, Maryland would already be sitting on a mountain of cash. In 2007 Mr. O'Malley signed a "millionaire surtax" raising the tax rate to 6.25% on income of $1 million or more and to 5.5% on more than $500,000, up from 4.75%. Maryland cities impose piggyback income taxes of up to 3.5%, so the effective tax rate in Maryland soared to 9.75% in places like Baltimore.

The surcharge on $1 million filers expired last year, though Democrats now want to bring it back. The state kept the tax on those making more than $500,000, so the wealthy in Maryland still pay up to 9%—compared to a national average of about 6.5%.

One immediate impact of the millionaire tax was that the yacht owners who were supposed to pay this higher rate suddenly went missing. The number of $1 million tax filers shrank to 4,151 in 2009 from 6,899 in 2007, meaning four of 10 seven-figure earners vanished from the rolls. In 2010 the millionaire pool partially recovered to 5,282, but that was still 23% below the number before the tax was enacted.

A big part of the decline was a result of the recession, but some of the missing millionaires left the state and stopped filing Maryland returns. According to the Baltimore Sun, thanks to years of exodus there are now "135,000 Marylanders, rich and otherwise" living in Florida alone.

Florida has no income or estate tax, while Maryland has one of the nation's highest estate taxes. Wealthy people often have more than one home, so it isn't hard for many Marylanders to spend 183 days each year in Florida to avoid the 9% O'Malley toll.

An analysis of tax data by the Maryland Public Policy Institute finds that the millionaire tax was supposed to raise $330 million, and the politicians spent accordingly. Instead, the tax raised closer to $120 million. Mr. O'Malley, who was celebrated as a progressive hero for sticking it to millionaires in the name of "fairness," now wants to finance his spending ambitions with taxes on Maryland's thousandaires. So goes the liberal tax and spend ratchet.

You'll also be happy to know that Mr. O'Malley is expected to run for President in 2016. Nancy Pelosi can't wait.