Greater Baltimore Committee competitiveness report urges Maryland tax reform

BALTIMORE, Sept. 4, 2013 /PRNewswire-USNewswire/ -- The Greater Baltimore Committee is urging government leaders to recognize the need to reform Maryland's tax structure to improve the state's business climate.

The Baltimore region's most prominent organization of business and civic leaders made restructuring state taxes in a strategic, but revenue-neutral way and examining the state's spending process the top priority in a report, Compact for Competitiveness: Developing Shared Strategies for Maryland Competitiveness, issued today by the GBC.

Building on eight core pillars for economic growth developed by the GBC for its 2010 report, "Gaining a Competitive Edge," the new GBC report offers a "To Do" list of priorities from business leaders for making Maryland more competitive as a location for business and job growth.

The report's priority list was compiled from surveys of more than 250 CEOs, work sessions conducted in the region, and facilitated workshop discussions with business executives at the GBC's Chesapeake Conference of CEOs, a day-long strategy session held in Baltimore on June 12.

The report calls for the creation of a "Compact for Competitiveness," a shared set of strategic priorities for economic growth and job creation that is embraced by leaders of both business and government in Maryland. 

The top issue on the minds of business leaders is taxes.  "Maryland's tax structure is the 'elephant in the room' in any discussion of our state's business climate," said GBC President & CEO Donald C. Fry.

The GBC will create an independent, private-sector task force to study Maryland's tax system and to identify strategic, but-not-fiscally-debilitating revenue-neutral adjustments to the tax structure that, coupled with strengthened efficiency in government spending, could significantly improve the state's competitiveness, said Fry.

"The GBC is not advocating for an across-the-board reduction in Maryland tax revenue, nor is it proposing a tax revenue increase," Fry said. "The GBC is proposing to examine and identify a strategic adjustment to our tax structure that fits with our current economy, would make Maryland more competitive and, at the same time, position state government for future revenue growth that would not stifle job generation."

Recent published reports rank Maryland's business climate anywhere from 16th to 41st in the nation. Yet such reports cannot be thought of as definitive benchmarks because various rankings apply differing criteria to determine the overall grade they give a state, Fry noted.

However, a common denominator in published reports is a less-than-favorable perception of the state's tax climate, particularly relating to individual income taxes. Business leaders and economic development experts in Maryland say that current state individual income tax rates, particularly on earnings of small business owners, are an impediment to business development, according to the GBC report.

"Maryland's tax structure is consistently cited as a business-climate challenge by most published rankings, including those that rate Maryland high in many other economic categories, and by private-sector leaders as well," Fry said. "It's time to take a serious look at this issue."

In addition to tax and spending reform, state priorities for competitiveness should include crafting a 10-year strategic plan for transportation, investing in port and airport resources, implementing regulatory reform, and deploying a coordinated STEM strategy throughout the state's K-12 and higher education systems, according to the GBC report.

Recommended priorities also include investing in resources to nurture innovation and entrepreneurship, strengthening the state's economic development programs, implementing outcome-driven accountability in K-12 education, and leveraging business partnerships for infrastructure development.

Among other things, the report also urges state lawmakers to consider changing Maryland's Congressional and legislative redistricting process to "cultivate more election competitiveness."

"The GBC offers these priorities for competitiveness as a potential starting point for the development of a strategic vision shared by business and government," said Fry.

SOURCE Greater Baltimore Committee