O'Malley cool to corporate tax cut, supports higher minimum wage

Gov. Martin O'Malley told a group of more than 100 state business leaders Friday that he was disinclined to cut the corporate income tax rate, but he wanted raise the state's minimum wage.

"It is a fact that wages have been declining in our country for the first time since the second World War. There is a growing gulf between our middle class and between the wealthy in our country," O'Malley said during a summit organized by the Maryland Chamber of Commerce.


The governor added: ""I think that we should raise the minimum wage. I'd like to see us do that."

The term-limited Democrat, who is considering a 2016 bid for president, has spoken broadly before about the need for higher wages. Friday's remarks were more elaborate and come as more Maryland lawmakers are lining up behind increasing the minimum wage. They also came the day after another powerful Maryland leader - Sen. President Thomas V. Mike Miller - suggested tying the increase to a cut in the corporate tax rate.

"I wouldn't want to see us go backwards," O'Malley said after an audience member asked him about reducing the corporate tax rate, which the state raised from 7 to 8.25 percent in 2007 to help close a budget gap. He said that as a public official he receives a lot of criticism from people who disagree with him, but not about the corporate tax rate.

"I've never, ever had a person come up to me and say, 'By God, that one percent increase in the corporate income tax is killing me.' I've never had one person say that," O'Malley said.

Business leaders recently complained the state's tax structure is a detriment to job growth. On Wednesday, the Greater Baltimore Committee, a business group, released a 38-page report developed by 52 Maryland CEO's that ranked reforming the tax structure as the group's top priority.

"Maryland's tax structure stands out as our state's single, most-cited business-climate deficiency," the report said. "It is the 'elephant in the room' in any discussion of Maryland's business competitiveness and it detracts from the state's many significant strengths as a business location."

O'Malley did not explicitly say he would refuse to revisit lowering the rate, but he described negative comments about the state's business climate as misconceptions "fueled relentlessly, especially in a campaign year."

"One of the worst things we can do for businesses is to allow our state government to be fiscally irresponsible," O'Malley. "I don't subscribe to the notion that the best, that the greatest good in a republic is a tax cut."

The governor, facing his final legislative session next year, raised two other economic ideas he supports to help residents save for retirement and for college. O'Malley floated the idea of a state-run 401k savings program that residents otherwise unable to sign up for such plans could use them.

The governor did not say whether he would pursue legislation to accomplish this vision when the Maryland General Assembly convenes in January. Senior aides have said O'Malley is still working on his final year's agenda.

"These will all be things will we talk about," he said.

Sen.  Edward J. Kasemeyer, Democrat and chair of the Budget and Taxation Committee, was in the audience for O'Malley's remarks and predicted the legislature will tackle a suite of economic issues next year. He ticked off minimum wage, corporate tax rates, saving for college and retirement tax incentives as part of a "package process."

"All these things we need to deal with in the near future," Kasemeyer said.

Both Kasemeyer and Howard County Sen. Allan Kittleman, a Republican, said that many business owners tell them the corporate tax rate is a burden.


"A lot of people have said it to me," Kittleman said, adding that it seems feasible no one had said it directly to O'Malley before. "I'm sure it's more out of respect for the governor."