Taxing Choice: Goodbye Maryland, Hello Delaware

By March 18, 2008Taxation

From The News-Journal, Wilmington, “Md. sales tax could make Del. a refuge“:

Lawmakers’ efforts to impose a new sales tax on the computer services industry may have permanently tarnished Maryland’s reputation among some small-business owners there, raising the possibility that they will simply pack up and relocate across the border.

The Legislature in November voted to implement a tax that the computer industry never had to deal with. Even as hopes rose last week that the 6 percent tax will be repealed, the issue already has prompted some computer businesses to explore Delaware’s offerings, fed up at last with high property taxes and government intrusion.

“We’re feeling more and more like the state wants to run everything,” said Duffy Thomas, who with brother Patrick makes up MidAtlantic Computer Connection in Willards, Md. “It doesn’t really welcome the individual with rights.”

Supporters of repealing the tax rallied in Annapolis last week, proclaiming “axe the tax.” The Tech Council of Maryland issued a news release decrying the effects of the computer services tax.

Meanwhile, the Baltimore Sun recaps last week at the Maryland Legislature:

Support is growing in the General Assembly for a plan to replace Maryland’s new computer services tax with an income tax surcharge on top earners, suggesting that the coming weeks could become a reprise of the debate that nearly scuttled November’s special legislative session.

Not to mention the $1.4 billion in tax increases passed by the Legislature last year.

Are lawmakers unaware of the mobility of businesses? Or employers? Of employees? According to “Rich States, Poor States,” a report by Arthur Laffer and Stephen Moore written for the American Legislative Exchange Council, Maryland ranked 32nd among the states in economic outlook, and that was BEFORE the tax increases. Delaware ranked 22nd. Virginia ranked sixth.

More coverage at the Maryland Chamber Blog.

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