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Our View: Tax expansion bill to fund Kirwan would be bad for business

There was no question the biggest issue during this year’s legislative session in the Maryland General Assembly session would be funding the recommendations that came out of the Commission on Innovation and Excellence in Education, more commonly known as the Kirwan Commission. On Thursday, Democratic lawmakers introduced a bill that would expand the sales tax to include many professional services that currently go untaxed — such as legal services and accounting — to bring in an estimated $2.6 billion annually earmarked to fund Kirwan.

Carroll County’s elected officials led a partisan chorus of criticism against the plan, saying businesses and already overtaxed residents across the state would suffer.

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Michael Fowler, Carroll County’s legislative liaison, briefed the commissioners during their weekly board meeting on the services the bill would tax, including cleaning and storage, golf course memberships, tattoos and piercing, tanning, interior design and decorating, dog walking, watch and jewelry repair and air transportation. ”Business and economic development and growth in the state is going to be hit very hard,” Commissioner Ed Rothstein, R-District-5, said. Added Commissioner Richard Weaver, R-District 2: “This really scares me as we start to look into our budget."

The commissioners, of course, are limited to criticizing the bill. Voting for or against it will come down to state legislators. The ones we spoke to are all in agreement, with Sen. Justin Ready, R-5, putting it most succinctly. “It’s a big fat ‘no’ for me,” he told us.

Del. Warren Miller, R-9A, who represents part of Carroll and Howard counties, said those counties are already offering the high-quality education the Kirwan Commission is trying to achieve and that he isn’t sure they will benefit. By and large, though, the issues with Kirwan are not the recommendations themselves, but rather how to pay for them. It’s a source of frustration to residents and elected officials in counties where school systems are thriving that they almost certainly will have to pick up a big portion of the tab for school systems that have been lagging.

It might be different if, by and large, Marylanders didn’t already feel overtaxed. According to Kiplinger, Maryland is considered a “not tax-friendly” state — the second-worst of five 10-state classifications — based on income taxes, local taxes, fuel taxes, property taxes and so-called sin taxes, etc. The publication also ranks Maryland “not tax-friendly" for retirees.

“It’s an insatiable appetite for taxing our people,” Del. April Rose, R-5, told us, noting that she has spoken with constituents who have an exit plan to leave the state when they retire or even sooner, due to the tax rates.

Del. Haven Shoemaker, R-5, sent out a news release on Thursday criticizing both the proposal and the state’s propensity for taxation: “Maryland is already one of the least tax-friendly states in the country. I suspect that everybody in my county knows somebody who has moved to neighboring Pennsylvania, to Delaware, or to the Carolinas to escape Maryland’s oppressive taxes. This will just speed up the exodus.”

We’re all for improving education statewide. We see merit in most of the Kirwan recommendations. And we’re not convinced the tax expansion would be particularly painful for most citizens — based on an estimate put forward by Del. Eric Luedtke, a Montgomery County Democrat, a family making $80,000 a year would pay only about $3 more a week under the expanded sales tax.

But the potential negative impact on businesses is more than reason enough to oppose this bill. Spending billions every year to better educate our students only to see them leave the state en masse to find meaningful work doesn’t make sense.

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"This is one way we can fully fund our schools,” Luedtke is quoted as saying in The Sun.

Which means there are other ways. And what’s sorely needed is a bipartisan approach to finding a way that will improve our schools without crippling business.

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