Maryland Chamber of Commerce President and CEO Mary Kane speaks after chamber members heard from the governor and other top state officials on the budget Thursday. (Photo by Jack Bowman/Maryland Matters)
Gov. Wes Moore reiterated his commitment to growing the economy to a largely receptive business audience Thursday, but small-business owners pushed back against the governor’s proposed tax hikes.
“We support Gov. Moore’s focus on economic competitiveness, including streamlining permitting and workforce development,” said Maryland Chamber of Commerce President and CEO Mary Kane, “but these efforts will be undermined if we continue worsening the tax climate.”
Her remarks, and Moore’s appearance, were part of a morning of meetings between state leaders and chamber members in anticipation of two days of legislative hearings on the massive Budget Reconciliation and Financing Act.
Moore, who opened the event, again referred in a 30-minute chat to his commitment to economic growth as Maryland’s “North Star.”
“I’m competitive as hell,” Moore said of his desire to grow Maryland’s economy. “I don’t like losing. Ever.”
The governor was speaking to a receptive crowd gathered at the Westin Hotel in Annapolis, with the audience laughing at his jokes and applauding when he referenced his desire to grow Maryland’s private sector.
But, in a press conference after Moore left, business leaders said that it’s some of the very tax measures that Moore has introduced that are causing businesses to flee to other states, including neighboring Virginia and Pennsylvania.
“Since 2020, nearly 100,000 Marylanders have voted with their feet and left their state,” Kane said.
Ari Azarbarzin, a senior vice president at the commercial real estate firm Northmarq, echoed the sentiment. He said that the state’s business environment has led to population contraction.
“Neighboring states like Virginia, Pennsylvania and Delaware are seeing significant population growth,” Azarbarzin said. “Our net migration losses indicate deeper issues affecting Maryland’s ability to attract and retain residents.”
The proposals that the chamber and the gathered business owners took aim at included changes to pass-through taxation and an adoption of combined reporting.
One of the critical aspects of Moore’s budget plan is a tax hike for Maryland’s most prosperous residents. Pass-through entities, which include small businesses structured as partnerships and limited liability companies, pay taxes through the owner’s individual returns, meaning these increases would hit them directly.
Kimberly Prescott, founder and president of Prescott HR, said the change would hurt real people.
“I know firsthand that this pass-through entity tax proposal isn’t just a line item on a spreadsheet,” Prescott said. “It’s real money coming directly out of the pockets of entrepreneurs like me.”
Prescott went on to question whether the change is “the kind of policy that will encourage more minority and women businesses to take risks, invest in their communities and grow in Maryland.”
Combined reporting, which the chamber says disregards affiliated taxpayers and requires them to file as a single entity, has been “studied and rejected multiple times” by Maryland, according to Kane. She said the practice “drives businesses away and could actually reduce our state’s revenue.”
The point of the business leaders gathered was clear: that the proposed tax changes would be bad for business in Maryland.
“The message we’re sending to entrepreneurs and businesses with this type of legislation is clear,” said Greg Brown, president of Monocacy Hospitality. “Your investment and job creation aren’t valued here, and I think that’s a very dangerous message to send.”
Brown, though, said that he appreciates Moore’s dedication to growth.
“I’m a hard sell,” Brown said, “but this guy is wearing on me.”