Few things surprise me anymore, especially when it comes to our leaders in Annapolis.
Still, the brazenness demonstrated this legislative session by politicians seeking to recast themselves as “pro-business” after years of supporting anti-business policies is downright amazing.
It started back in January, which Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch unveiled their “Joint Legislative Business and Economic Development Agenda” for the 2014 session of the Maryland General Assembly.
The “agenda” was an amalgam of modest, feel good initiatives — another commission to study the state’s well-documented business climate deficiencies, another taxpayer financed investment fund, customer service “training programs,” and even a proposal to put “graphic images” on state tax forms so Marylanders “know what programs their tax dollars are invested in” — repackaged as a comprehensive action plan for business.
Missing from the agenda were meaningful proposals for which business leaders have been loudly advocating for years.
For example, legislation to reduce Maryland’s 8.25 percent corporate tax rate in order to enhance its ability to compete with neighboring states such as Virginia, where the rate is 6 percent, died once again this year.
Curiously, as the alleged pro-business agenda meandered through the legislature, legislators raised the minimum wage to $10.10 an hour, making it 40 percent higher than in Virginia, Pennsylvania and many other states.
This may be good election year politics, but it is bad economics that will hurt businesses and workers alike. Specifically, according to a study commissioned by the Maryland Foundation for Research & Economic Education, raising the minimum wage in Maryland to just $10 an hour would result in nearly 12,000 lost jobs, real personal income losses totaling $760 million, and slower economic growth.
The reality is, nothing in the agenda will bring back the jobs of the estimated 176,000 Marylanders unemployed in February, or the eight corporate headquarters, the 31,000 taxpayers and the 6,500 small businesses lost since 2007.
That can only be accomplished by addressing concerns about jobs, taxes and the overall health of Maryland’s economy with concrete steps.
First, we need to change Maryland’s reputation as a business unfriendly state. According to different rankings, Maryland’s business climate ranks 41st, and our economy 44th, out of 50 states. Raising the minimum wage will not push these numbers in the desired direction.
Second, we need to change Maryland’s tax structure, making it competitive with other states. This includes both personal and corporate taxes. Over a three year period, Maryland saw the seventh highest negative net migration in the country, losing 31,000 citizens and $1.7 billion per year from the tax base. Meanwhile, Marylanders are now forced to cope with 40 new tax increases. Our goal should be to ensure that taxes are not the major reason for any business or any citizen to choose to go elsewhere.
Third, we need to change Maryland’s onerous and unpredictable regulatory regime. Constantly changing regulations and enforcement procedures make it impossible for this to happen, making Maryland a far less attractive place to locate or grow a business. Businesses require reasonable regulatory predictability and even-handed enforcement so that they can do the longer term planning crucial to growth and success.
Taking these kinds of actions will send a clear message: When it comes to competing to recruit or retain new companies and jobs, Maryland finally means business.
Recently, Lt. Gov. Anthony Brown’s campaign revealed plans to form a “Business Advisory Council” and conduct a “business climate tour” across the state. In a memo to business leaders, the campaign calls the help of senior business leaders “crucial to our campaign and our strategic goal to create the most competitive business climate in the nation.”
Such activities serve a political purpose, especially in an election year. But the only way these kinds of interactions will translate into pro-business policies is if our state’s leaders choose to hear what Maryland’s job creators have long been saying.
To date, they have not, opting instead for election year gimmicks like the agenda to obfuscate a record of economic failure.
Gimmicks won’t fix Maryland’s economy any more than publicity tours or putting cartoons on tax returns will. Real change will require a willingness to lead, listen and embrace new solutions.
Larry Hogan is a Republican candidate for governor. He is a former state cabinet secretary, chairman of Change Maryland and the founder and CEO of Annapolis-based The Hogan Companies. He can be reached at firstname.lastname@example.org.
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