Del. Impallaria: Maryland’s business climate and taxation are under liberal control [Commentary]
By Rick Impallaria
Mar 12, 2020 at 5:00 AM
For years Maryland has been held hostage by Democratic control. The liberal policies and agenda have done such damage to our state that I for one am truly concerned for our children’s future.
Forbes periodically publishes ratings for states that have the best pro-business climates. No more than six years ago Maryland received a rating of 18th overall out of 50. However, in the most recent Forbes list for 2018, Maryland was rated 27th. The Tax Foundation, a nonpartisan tax research group, released their State Business Tax Climate Index for 2020. Maryland was rated the 43rd worst state for businesses. Our corporate tax rate of 8.25% is the eighth-highest in the country. Currently, Maryland is the only state to assess separate taxation for inheritance and estates. This is indicative of liberal control in the General Assembly and State House.
This session we have the old Thornton program repackaged as the new Kirwan Commission. The original Thornton program was a failure due to lack of oversight and accountability. I have not seen any reason to think this new agenda will be different. The cost for funding this program will be $32 billion over the next 10 years. To put that in perspective Maryland’s total operating budget for 2020 is about $46 billion. Maryland state law requires a balanced budget and finding money to fund this program can only mean one thing, more taxes!
The liberal wing of the Assembly has also introduced several bills designed to help fund the Kirwan program, all of which increase the costs of products for consumers. HB1628, Sales and Use Tax is extremely misleading. This proposal would reduce the sales tax rate to 5% and then initiate a tax on a multitude of services and industries. Services such as trade labor, media streaming to financial planning would now be taxed. This would be the single-largest tax increase in Maryland history. Currently the bill has stalled in committee but that does not mean this bill will not be revisited at a later date. Another is HB222 which increases the capital gain tax by an additional 1% across the board. Finally, we have HB732 which increases the tax rate on multiple tobacco product lines. The tax on cigarettes will increase from $2 to $4 per pack. On other tobacco products the tax rate will increase from 30% to 86% of the wholesale price and the electronic smoking device tax would equal 86% of the wholesale price.
With the minimum wage increase passed into law in 2019, the next few years we will see the dramatic effect on our business community. Owners will be forced to cut back on staffing and expenses or pass the increase on to the consumers. The proposed service tax, increased wages and higher business tax rates will only make it more difficult to be a business owner in this climate. Maryland is already one of the highest-taxed states in the country and with the legislation under Democratic control this will only be the beginning of even higher taxes and less accountability.
Over the last 17 years that I have served in the Maryland General Assembly, I have seen countless examples of liberal legislation that have negatively affected our state and the health of our business climate. With this trajectory I fear the worst over the next decade and beyond. I often wonder if the citizens in question are truly this liberal or is it the lawmakers they elect. If this type of irresponsible liberal influence within our school systems and state government continues to guide us down this one-way street eventually the check will be due. Our small business community will start to raise prices, cut back on staff, move their operations out of state or in some cases close. The long-term impact will be significant thanks to the short-sightedness of the controlling liberal lawmakers.
Rick Impallaria is a Republican in the Maryland House of Delegates representing District 7.