Maryland Business for Responsive Government characterized the conclusion of the special session as yet another self-inflicted wound on the state's business climate. The outcome of this special session, enabling the state to collect $264 million in additional revenues, comes mostly through increases in the individual income tax. New tax brackets and reduced exemptions will hit those with annual incomes of $100,000 or greater and comes on the heels of such legendary ill-conceived tax policies including the 2007 tech-tax and its replacement - the millionaire's tax.
"This latest self-inflicted wound on our business climate could have been avoided if our state government lived within its means, " said MBRG President Kimberly M. Burns. "Instead, our top elected officials chose the politically expedient route of continuing government spending at record levels and avoiding the difficult choices required of a fiscally-responsible approach to governing."
Over 80,000 businesses filed S-corporation tax returns in Maryland in 2010, according to the state comptroller's office. Income from S-Corporations, LLCs, and sole proprietorships are taxed at personal income rates. Many businesses will simply reduce employment levels or reduce costs elsewhere.
Robert Bauman, President of Trusted Systems, Inc. in Carroll County, and a member of MBRG, said businesses will adjust to tax increases in any number of ways including layoffs, pay cuts, raising prices or identifying other cost-saving measures.
“Many people don't realize that with this increase in the individual income tax, you are essentially taxing businesses at higher levels as well," said Bauman. "It's foolish to think that won't impact hiring and stunt private sector job growth."