Oh, Maryland: Man, It’s Hard Just to Live

By November 20, 2007Taxation

Maryland lawmakers have passed and Gov. O’Malley has signed a budget that will raise taxes by $1.3 billion. Or rather, $1.3 BILLION!

The reports we see focus on the impact on individuals, a journalistic convention for framing policy decisions in terms the public can appreciate. For example, from The Baltimore Sun:

Beginning in January, consumers will pay an added penny in sales tax for every dollar spent in stores on most products. They’ll pay $1 more for a pack of cigarettes. In July, a consumer facing $250 in computer repairs will pay an additional $15, and businesses needing custom computer programming will see a much higher bill.

But what about the broader implications for Maryland’s economy and business environment? There is this, after all:

Corporations will pay an income tax rate of 8.25 percent, up from 7 percent, which will bring an additional $140 million to the state treasury.

Attracting new businesses to the state will simply become more difficult as decision-makers react not just to the higher taxes but to the less hospitable business climate generally, including a polity that reactively raises taxes instead of controlling spending.

In its 2007 review of America’s Top States for Doing Business, CNBC rated Maryland 27th overall . The state lost points for cost of living — 46th — and cost of business — 29th. Right next door, Virginia, ranked No. 1 overall.

Maryland’s disadvantages just grew.

Other notes:

  • An Associated Press story: “Taxes In Maryland Could Boost Delaware Shopping
  • Baltimore Sun, “O’Malley’s risks not over.”
  • WJZ, “Former Governor Not Pleased With Tax Increase.” That would be Robert Ehrlich.
  • eWeek.com: “Maryland to Tax Computer Services.” “Maryland lawmakers Nov. 19 approved a 6 percent sales tax on computer services, a move industry groups call harmful to business and service.”
  • UPDATE (8:15 a.m.): From the governor’s office, a summary of the bills signed into law.

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