Maryland Senate Republican Slate
Want to Really Stimulate Jobs? Then Cut Corporate Taxes!
Governor Martin O’Malley heralded his job creation package on March 25th at a bill signing in Annapolis. Proclaiming that his administration was all about creating jobs, he signed the Senate Bill 106 – Job Creation and Recovery Tax Credit that provides for a $5000 tax credit to Maryland employers who hire the unemployed. Under O’Malley’s budget proposal, this could lead to the creation of 4000 jobs if fully implemented.
In his press release, O’Malley stated: ““Progress requires that we focus the energies of this legislative session on creating jobs, saving jobs, and protecting jobs. To rebuild and restore our economy, we must help our businesses create and save jobs, and improve the conditions under which business can create or save jobs.”
Unfortunately, the Bureau of Labor Statistics released new job loss figures the next day. The number of O’Malley’s new jobs (4000) pales in comparison to the 13,800 Maryland jobs lost just in the month of February. Maryland was fifth worst in the country for job losses in February.
Piling on to O’Malley’s hollow promises about job creation was the announcement by BP Solar in Frederick on March 26th that they are closing their Maryland solar panel production plant and eliminating 320 manufacturing positions.
Four years ago, Maryland’s unemployment rate was 3.5%. Under O’Malley’s tenure, it rose .2% last month to 7.7%. While the recession has been a key to job losses, Maryland’s deteriorating business climate has stymied the state’s recovery.
What O’Malley should be signing to create jobs is legislation to lower Maryland’s corporate tax rate. Testimony for Senate Bill 773 introduced by Senators Alex Mooney and Richard Colburn support lower corporate tax rates as a means to stimulate economic growth and attract new businesses to the state.
Instead of lowering corporate taxes, O’Malley raised the corporate rate as part of his historic tax increases during the 2007 special session. It is just another example of misguided policy from O’Malley that contributes to Maryland’s poor business climate. In the last four years, Maryland has plummeted from 24th to 45th on the list of business-friendly states.
The following testimony demonstrates how Maryland fails to compete with neighboring states because O’Malley clings to high-tax policies as the cornerstone of his budgetary program.
TESTIMONY OF
JONATHAN WILLIAMS
AMERICAN LEGISLATIVE EXCHANGE COUNCIL
MARYLAND SENATE COMMITTEE ON BUDGET AND TAXATION
MARCH 9, 2010
Mr. Chairman and Members of the Committee, thank you for the opportunity to testify in support of Senate Bill 773. By way of background, I serve as the Director of the American Legislative Exchange Council (ALEC)’s Tax and Fiscal Policy Task Force. As you may know, ALEC is the nation’s largest nonpartisan membership organization of state legislators with nearly 2,000 members across the country. As Task Force Director, I work with our members to develop common-sense policies that reduce wasteful government spending and protect taxpayers.
Along with Dr. Arthur Laffer and Steve Moore from the Wall St. Journal, I co-authored Rich States, Poor States: The 2009 ALEC-Laffer State Economic Competitiveness Index. This publication outlines the inverse relationship between state taxes and state economic performance. In the book, we compare the economic performance of the 10 states with the most competitive corporate tax rates (Nevada, South Dakota and Wyoming do not levy a corporate income tax at all) with the 10 states that have the highest corporate taxes. I thought this committee would be interested to see the results.
Over the past decade, the 10 states with the lowest state corporate income tax rates had nearly 18 percent job growth, compared to 8 percent for the 10 states with the highest corporate income tax states. In addition, personal income grew by more than 82 percent in the low-corporate-income tax states, versus less than 58 percent in the high income tax states. Finally, states with competitive corporate tax policies saw their populations grow twice as fast as states with high corporate taxes. People do indeed vote with their feet.
In the context of a global economy, states must find ways to increase their competitiveness. The top combined federal and state corporate tax rate is higher in Maryland than almost anywhere else in the world. Meanwhile, Virginia, your neighbor to the South, offers low corporate tax rates, which is attracting businesses to relocate to Virginia.
After seeing the economic success of Boeing’s recently opened assembly line in Charleston, SC, House Speaker Bobby Harrell pointed out, “Our state’s future hinges on the strength of our economy and the private sector’s ability to grow and create jobs.” In fact, this week, the South Carolina House voted to eliminate their corporate income tax in an effort to rebuild their state’s economy. This will send a clear message to businesses looking to move or expand: South Carolina is open for business.
Now more than ever, Maryland must find ways to attract businesses to foster economic growth and job creation. Senate Bill 773 is an important piece of legislation, which would create much-needed economic development by giving Maryland the ability to compete with states like Virginia and South Carolina.
How Much Will ObamaCare Really Cost MD
Tucked into the newly enacted federal health care legislation is a mandate that states expand Medicaid, which will cost Maryland hundreds of millions of dollars. But Gov. Martin O'Malley declared in a recent speech that this bill will actually save the state money. Considering that in the same speech, he also bragged about the state's health care programs - without noting their significant problems - perhaps his judgment isn't all that reliable. Just as the state's 2008 Medicaid expansion (championed by Mr. O'Malley) has been a burden on the state's budget, so too will be this health care legislation.
In hailing the passage of federal health care legislation, Governor O'Malley claimed it "will build on our progress" in Maryland. Of course, he defines "progress" in terms of legislation he has championed. Two of the initiatives he mentioned - Medicaid expansion and a health insurance partnership with small businesses - are good examples of why government should not be in the health care business.
The governor commended an expansion of the state's Medicaid program. Yes, more people are now enrolled in the state's medical care program than when Governor O'Malley entered office. That is in large part why the governor requested $6.2 billion in this year's budget for a program that cost $4.8 billion in 2007, a 29 percent increase in four years.
The Medicaid expansion specifically championed by Governor O'Malley was already exceeding cost estimates by the end of its first year. The cost for all of the state's medical care programs has been higher (usually far higher) than the amount budgeted for them in every year of Governor O'Malley's term. This runaway spending is directly contributing to the state's current budget woes.
To read the full commentary on the Baltimore Sun Opinion website, click here.
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House Democrats Backslide on Senate Deficit Reduction Plan
The State Senate took heroic measures to slash $3 billion off of Governor Martin O’Malley’s legacy of $8 billion in structural deficits over the next four years. As reported by Andy Rosen of MarylandReporter.com, the Appropriations Committee of the House of Delegates has completed their budget proposals. The result is serious backsliding from the Senate plan to curb state spending by capping mandatory formula increases in state law and thus obliterating long-term deficit reduction.
The House budget plan guided by Speaker Michael Busch and House Democrats restored a number of O’Malley’s original spending programs thus reversing reductions and long-term actions initiated by the Senate for deficit reduction. Approximately $2 billion was restored of the $3 billion deficit reduction actions made by the Senate. The net result is O’Malley $8 billion of deficits is reduced only to $7 billion under the House plan which will be presented to the entire body for floor debates this week.
A summary of these budget decisions includes:
· Rejected the Senate proposal to transition and shift county responsibilities for teacher social security payments to the state and the state’s responsibility for teacher pension payments to the county so that there is an equal county/state sharing in five years.
· Retained a controversial transfer proposed by O’Malley to strip $20 million from the reserves of the IWIF (state’s worker’s compensation fund) that was rejected by the Senate because of concerns that it was unconstitutional.
· Restored stem cell research funding reduced by the Senate (O’Malley & House at $12.4 million/Senate at $6.2 million).
· Eliminated the legislative scholarships program but kept the funds in the higher education need-based scholarship program
· Removed Senate budget language requiring the Maryland Transit Administration to study alternative to the high-cost Red and Purple Line projects in the Baltimore and the Washington suburbs.
To read the entire MarylandReporter.com article: click here
Marta Mossburg On Legislative Logic (or lack thereof) In Annapolis
Marta Mossburg in her commentary in yesterday's Baltimore Sun captures the essence of legislative logic in Annapolis:
ANNAPOLIS — April 13, 2012
State legislators voted to close drive-throughs yesterday in a late-night, pizza-fueled frenzy in which they passed 20 other bills in the last minutes before the end of the session.
They said the ban, part of legislation outlawing eating while driving, will save lives. They also described it as one more victory in the war against distracted driving, which studies show is a major cause of accidents. Other distractions on the hit list: GPS systems, smoking, applying makeup, radios, Hooters billboards — and passengers, who may be required to be silent in coming years.
"We did not have the votes for a comprehensive ban on all distractions this year," said House Speaker Michael E. Busch. "But we're hopeful we'll push it through next year."
Fast food chain restaurant owners were blindsided by the vote, they said. "How can you ban drive-throughs?" said Mike Schmidt, who owns a McDonald's in Annapolis. "They are the quintessential American dining experience."
Another said there was no way to enforce it, since people could buy food to go and still eat in their cars. "Are they going to station cops outside our driveways, like bars?" asked Michelle Smith, who owns a Taco Bell in Dundalk.
Legislators could not say whether the ban would stop people from eating in their cars, pointing out that after hand-held cell phones and texting were banned in New Jersey, the number of people who admitted to texting while driving rose, according to a study by Fairleigh Dickinson University of New Jersey drivers.
Maryland has not analyzed whether its ban on using hand-held devices two years ago has reduced accidents. But Maryland reports $2 million higher revenue this year from tickets related to it.
To read the entire Mossburg column on the Baltimore Sun Opinion website, click here.
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