Maryland remains tax unfriendly
 

Several new and independent stud­ies support business leaders' claims that Maryland's tax policies negatively affect their competitiveness.
 

The Tax Foundation, a think tank based in the nation's capital, ranks Maryland 40th overall in its 2019 State Business Tax Climate Index.
 

The personal finance website WalletHub also ranks Maryland 40th on its list of best places to start a business, and 47th in terms of business costs.
 

Kiplinger, a Washington, DC-based publisher focused on personal and busi­ness finance and forecasts, does not rank states, but includes Maryland among states labeled "Not Tax-Friendly" in its 2019 State-by-State Guide to Taxes.
 

"Prior to 2007, Maryland had a pretty competitive tax structure, we were in the middle of the pack;' said Christopher Summers, president and CEO of the nonpartisan Maryland Public Policy Institute (MPPI)." The [General Assembly's] 2007 Special Session did enormous damage to our competi­tiveness. We're still experiencing the negative externalities of those decisions [that] really wrecked the tax code."

That session increased the state's sales tax, gasoline tax and corporate tax rates, increased income tax rates for Maryland's wealthiest residents and extended the sales tax to a number of services.
 

Speaking at an October Howard County Chamber of Commerce (HCCC) event focused on economic growth in Maryland, Summers presented the latest results from the Maryland Business Climate Survey.
 

The joint project between the University of Baltimore's Jacob France Institute and the MPPI surveys 250 senior executives at Maryland businesses each quarter, providing an ongoing look at business sentiment in the state.

Taking the Pulse
 

As described by Summers, the Maryland Business Climate Survey gives lawmakers and citizens critical informa­tion needed to mobilize for common sense policies that spur economic growth.
 

Richard Clinch, executive director of the Jacob France Institute, initiated the survey in the mid-1990s with seed fund­ing from BGE and partial funding from Maryland's Department of Business and Economic Development.
 

After a period of dormancy starting in 2011 triggered by dwindling corporate sponsorship and termination of state funding, Clinch and Summers resur­rected the survey in late 2017, once again backed by corporate sponsorships.
 

"We're doing what nobody else is doing in Maryland, actually taking the pulse of hundreds of business leaders and CEOs," Summers said.
 

The annual survey for 2018 revealed the perception of a-positive; pro-business environment under Gov. Larry Hogan: 51 percent of respondents reported the state's business environment as pro-busi­ness as opposed to 16 percent who saw it as unfriendly or anti-business.
 

At the same time, 64 percent of Maryland businesses reported being negatively impacted by Maryland's taxes, and 24 percent reported being negatively impacted by state regulations.
 

Those numbers represent a slight improvement in comparison with the last survey taken in 2011, in which 67 percent reported taxes and 36 percent reported regulations as having a negative effect.­

In 2018, the survey shows Maryland businesses split on their view of Maryland's regulatory climate, with 33 percent viewing it as competitive and 30 percent viewing it as uncompetitive.

Labor Factors
 

Looking at first and second quarter results for 2019, "We're still looking good with slightly expanded revenues and employment, and firms are reporting continued employment growth through the second quarter," Summers said. "Roughly 65 percent of the businesses expect the market they serve to grow in Maryland"
 

A big recurring theme, however, is workforce shortages, with half of the firms surveyed reporting difficulty finding workers and 78 percent report­ing both short- and long-term employee shortages.
 

"Tax structure is still a barrier, 63 percent reported negative impact of taxes in general, and income taxes are the big complaint because of the number of LLCs in the state," he added.
 

Still, roughly 35 percent of respon­dents said they view Maryland's taxes as competitive, which Summers said could be influenced by the range of company sizes included in the surveys and the abil­ity of larger companies to absorb costs more readily than smaller companies.

Dynamic Viewpoint
 

"Maryland's tax climate is truly one of those legislative discussions that never seem to go anywhere," observed Leonardo McClarty, president and CEO of HCCC. Although it returns as one of the top issues every year, "There just doesn't seem to be an appetite to address it."
 

Summers and Clinch hope that their quarterly survey data might influence state lawmakers who are accustomed to viewing tax legislation as a static model, and not a dynamic model.
 

"They don't see that cutting taxes actually generates more revenue," Summers said. "People forget that during the second term of the Glendenning administration we actually cut personal income tax brackets. When you look through the historic tax data, we actually increased revenues in the state."
 

Chris Costello, a partner with the Public Sector Consulting Group, said the Maryland Business Climate Surveys original purpose was not to simply provide information, but also to stir the business community to rise up and inspire the General Assembly to be more responsive to their concerns.
 

"With the proper policies in place, Maryland can generate the kind of wealth that is going to provide more income and jobs and more stability for people in your community," he said. "We can have all this and still have a better quality of life. We don't have to do anything that would drastically change the tenor of Maryland's political structure, but we have to help get this message out."