State & Local Tax Blog

What’s the Rush to Tax? Maryland Trying to Solve Deficit

So Maryland has a projected $1.5B deficit they’re trying to deal with. What creative approach do they conceive? Increase taxes. The Governor wants to raise the tax rate to 6% from 5% and tax a raft of new types of businesses. But these things have to be done with input from the taxed businesses. But in politics, you have to strike while the iron is hot. Some legislators, don’t like it though.

I like this quote from an impassioned Sen. E.J. Pipkin, R-Upper Shore, as quoted in the Maryland Daily Record who said the proposal was moving too quickly and there should be more time for people to respond to the proposal and for legislators to clarify the intent of the legislation. “What’s the rush this week …? You’ve just included millions of people into a tax bill, and you didn’t get the input of the industry, and you’re saying we didn’t have time.”

Even Maryland Comptroller Peter Franchot is quoted as saying “It’s an example of what happens when you try to implement tax policy at warp speed in a highly charged political environment… adding a tax provision of this magnitude to legislation at the 11th hour — without the courtesy of advance notice, the benefit of meaningful public input or sufficient understanding of its effects — plays into the hands of those who would unfairly question Maryland’s business climate,” Franchot wrote.

It appears that Maryland may end up taxing “computer services”. That’s always problematic. A number of states have tried that and always find that the big difficulty is determining whether to tax is due and to what extent on services that were performed out-of-state for in-state companies.

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