The Tax Foundation released the 2011 State Business Tax Climate Index report late last year. Maryland ranked 44th out of the 50 states. The only states that ranked worse were:
- Iowa (45th)
- Ohio (46th)
- Connecticut (47th)
- New Jersey (48th)
- California (49th)
- New York (50th)
The Tax Foundation uses corporate taxes, individual income tax, sales tax, unemployment insurance and property taxes (corporate and individual) to give an overall rank to each state. Each category is given a different weighted percentage. Now here is how Maryland ranked in each category:
- Corporate Tax Index (14th)
- Individual Income Tax Index (49th)
- Sales Tax Index (11th)
- Unemployment Insurance Tax Index (47th)
- Property Tax Index (40th)
Does this give everyone a pretty good idea at why Maryland ranks almost dead last in private sector job growth? This is why Northrup Grumman cited overall business climate as the main reasoning behind choosing Virginia over Maryland. The goal of this governor and our representatives should be to create as many private sector jobs as they can for the citizens of Maryland, making our state less dependent on federal tax dollars. This is never going to happen when you rank 44th in the nation in overall business climate. To give you an idea of what Maryland has to compete with here are a few examples of our neighboring states:
- Delaware (8th)
- Virginia (12th)
Now how can we expect to compete with those two states when they have such friendlier business environments? Why would a business ever choose Maryland over these states? A major reason behind this is the Individual Income Tax Index ranking. These states both rank much higher there meaning their citizens have more disposable income to purchase the goods or services a business sells. Our representatives surely know about this study so why have they chosen to ignore it? They have promised all of us that jobs are the most important thing for them when they get elected.
We hear it every four years. The last time we ranked in the top 30 was the last year of Governor Erlich’s governorship. Maryland ranked 25th in 2006 and 24th in 2007 when policies had yet to be changed under Governor O’Malley. For those O’Malley supporters out there, why if Martin O’Malley is for the people and you believe he is going to help you get jobs and have a better life, did Maryland drop 23 spots to rank 47th after his first full year as governor in 2008. We have never ranked in the top 40 during his administration.
To start with we could try to improve our ranking in the Individual Income tax index. Ranking 49th in the country is unacceptable. Overall taxes should be lowered on all income brackets making the state a much more attractive option for businesses
Next, we need to address the property tax issue. Overall property taxes should be lowered across the board. This would free up even more disposable income for our citizens to put back into the Maryland economy and make Maryland a more attractive state for a businesses to start and/or move to.
The third issue we obviously need to address is the Unemployment Insurance tax index. Ranking 47th in any category is unacceptable. Obviously, we have to lower the amount paid by businesses for this insurance. This would again free up money for the businesses to perhaps expand, and hire new workers.
If we could make strides in these three respective categories, Maryland could easily jump into the top 25 once again. If our representatives and governor were serious about bringing jobs to Maryland they would address these issues in the upcoming special session. When would be a better time than now to become more business friendly? Bring jobs to Maryland during this period of down economic times and reap the rewards now and in the future. The government cannot create jobs and bring prosperity to Maryland only the private sector can do that. We need to encourage our representatives to put into place policies that encourage growth in the private sector.