O'Malley Raised Unemployment Insurance Tax To Highest In The Nation

Last week Governor O'Malley boasted about the lower unemployment taxes Maryland businesses will see next year. He claimed the lower rates are a sign of the "progress" of Maryland's economic recovery under the O'Malley-Brown administration.

"What recovery is he talking about?" said business leader and Change Maryland Chairman Larry Hogan. "There are 6,500 fewer small businesses, unemployment has doubled, and 120,000 additional people are unemployed since O'Malley took office. This is just another chapter in Martin O'Malley's book of fairy tales," Hogan said.

Due to the recession, unemployment claims all but depleted Maryland's Unemployment Insurance Trust Fund, going from a high of $680 million in 2009 to a low of $50 million in 2010. Governor O'Malley cajoled and bullied business groups, who initially opposed his plan to replenish the unemployment trust fund.

However, O'Malley's plan included taking $127 million in federal funds with all sorts of policy strings attached, which saddled Maryland businesses with even more tax and regulatory burdens

Under O'Malley's plan state businesses saw their unemployment insurance taxes triple to the highest in the nation.

The state also borrowed $250 million from the federal government to meet unemployment insurance benefit claims.

In the year after O'Malley's "fix," a legislative audit found that his Department of Labor Licensing and Regulation paid $150 million in unemployment insurance claims to people were working, dead, or in prison.

"Martin O'Malley will never tell you the whole story," Hogan said. "The fact is, that it was the O'Malley-Brown administration that foisted these high tax rates on Maryland businesses in the first place. Over-charging and gouging businesses for years during the recession caused us to now have a surplus, it had nothing to do with any imaginary recovery,” Hogan continued. “O'Malley cares more about the unemployment insurance fund than he did about addressing unemployment."

Change Maryland has documented the O'Malley-Brown administration's 40 tax and fee increases, which had removed $9.5 billion annually from Maryland's economy. They include raising the corporate income tax from 7 percent to 8.25 percent and multiple personal income tax rate hikes, which affects many of Maryland's small businesses.

According to the non-partisan Tax Foundation, Maryland pass through entities—businesses that pay the personal income tax rate—face the seventh highest marginal tax rates in the nation. The Tax Foundation cited Maryland's high unemployment tax rate as one reason they ranked the state 41st its Business Tax Climate Index.

Change Maryland is the state's largest and fastest growing grass roots movement and has swelled to over 60,000 members. Change Maryland is the leading voice of independent, non-partisan opposition to the O'Malley-Brown power structure, focusing on economic and fiscal reform.

In 2013, Change Maryland brought together federal, state, and local government officials, think tanks, economists and over 400 business leaders from across the state for a summit on improving Maryland's economic competitiveness, in order to identify comprehensive solutions to the state's serious economic problems. The group also produced numerous economic studies which have shown the impact of the 40 consecutive O'Malley-Brown tax increases on Maryland's economy: a mass exodus of businesses, jobs and taxpayers fleeing the state at an alarming rate and taking billions out of our economy.

Larry Hogan has been active in the Maryland business community for over 25 years. He is the founder and President of the Hogan Companies, leaders in economic development, who have brought hundreds of companies and thousands of jobs to Maryland. He took a hiatus from the private sector to serve as a Cabinet Secretary in the Ehrlich Administration. He has led citizen referendums to limit taxes and to reform government and spent decades working to change Maryland for the better.