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Kudos to MBRG member Bob Bauman: Maryland business groups cautious on tax increases
Monday, May 14, 2012
Baltimore Business Journal by Gary Haber, Staff Reporter
As lawmakers returned to Annapolis Monday for the start of a two-day special session, business groups were sounding off against any attempt to raise taxes.
If the General Assembly doesn’t pass a tax increase, a so-called “doomsday budget” would cut spending by $512 million in the fiscal year that starts July 1. That’s because the Senate and House of Delegates could not hammer out an agreement on taxes before the 90-day General Assembly session ended last month.
Democratic lawmakers are looking to raise state income tax rates for Marylanders with more than $100,000 in income and for couples with more than $150,000 in income. Republican legislators have come out against an increase.
The Maryland Chamber of Commerce Maryland Chamber of Commerce Latest from The Business Journals New group to lobby for Maryland small businessMaryland bills ripple to businessesMaryland bills OK'd that may impact your business Follow this companysaid in a statement Monday it opposes the tax bill — the State and Local Revenue and Financing Act of 2012 — “due to the negative impact of the many tax changes on Maryland businesses.”
Maryland’s income tax rate is already high compared with neighboring states, the chamber said. Increasing the tax rate would push business owners to move out of state, depriving the state of tax revenue, the business group said.
The chamber was not alone in weighing in against a tax hike. The National Federation of Independent Business also said Monday it opposes efforts by lawmakers to raise taxes on middle-class Marylanders.
“We should be looking for ways to protect small businesses and taxpayers from a government that we can no longer afford,” Ellen Valentino, NFIB’s Maryland state director, said in a statement. The group represents more than 4,000 small businesses in the state.
Meanwhile, officials from the administration of Gov. Martin O’Malleysaid in testimony before lawmakers Monday that tax increase is necessary to stave off cuts to local school districts and the University of Maryland system, and preserve the state’s AAA bond rating. The cuts would also eliminate the state’s $8 million biotechnology tax credit.
But another tax increase would hamper the ability of small businesses to expand and hire more workers, said Robert Bauman, a Carroll County small business owner.
Bauman, president of Trusted Systems in Taneytown, said his 40-person company that makes computer network security equipment for defense contractors, already pays out more than half of its profits in federal and state taxes.
“The less we have available, the less we have to invest,” said Bauman, who is a corporate sponsor of Maryland Business for Responsive Government, a pro-business group.
A tax hike “has a dramatic effect because it does hit the bottom line,” Baumann said.
In addition to raising taxes, lawmakers also want to pass along some of the costs of teacher pensions from the state to the counties.
The chamber said it supports that move but said the estimated $154 million in costs that would be passed along when the transfer kicks in fully in fiscal year 2016 is not large enough.
“We believe the General Assembly is missing a key opportunity to stabilize state expenditures, and should require a more meaningful sharing of the total teacher pension costs with local school boards,” the chamber said in a statement.”