New tax on tech to help Maryland budget deficit?

MARYLAND – Maryland Governor Wes Moore and General Assembly leaders have announced a 3% tech tax on small business.

This would directly impact IT companies and others in the tech field.

This is the latest installment from lawmakers to chip away at the more than $3 billion budget deficit Maryland is facing.

Early projections indicate this tax on tech would generate nearly $500 million.

“It’s our understanding that this tax is going to be imposed on any service that we provide to these other businesses within the state of Maryland,” said Todd Justice with Atlantic Technology Services, Inc.

Justice said the 3% tax imposed on tech services would stifle business.

“To me it seems like the mindset of our state is we’re in a deficit and let’s tax our way out of it,” said Justice. “I don’t see that as being a solution moving forward.”

He’s worried that the tax would contribute to a loss in customers.

“One of the biggest concerns for me is that we could lose clients to companies that are out of state and quite frankly, we’re at the point now where we’re considering moving out of state ourselves,” said Justice.

According to the Maryland Chamber of Commerce, the proposed tech tax will impact over 15,000 employers and 99,000 jobs, with many more being affected indirectly.

“Every business no matter what size is using the technology that’s going to be taxed in this budget reconciliation financing act,” said Bill Chambers, President & CEO of the Salisbury Area Chamber of Commerce.

Sectors that will be impacted include IT consulting and cyber security solutions, streaming services, computer systems design and software design.

“These are the very industries we want to grow and nurture the future economy and while I understand the purpose of the tax in generating revenue, I don’t agree it’s a proper way to change the tax code to bring us up into the 21st century as it’s been cited by the sponsors and supporters of this legislation,” said Chambers.

Chambers said the state needs to look harder within itself at how they can curtail spending.

He believes there can be additional cuts in the state’s budget to avoid taxing these businesses.

Chambers also believes Maryland has opportunities to grow its economy, but needs a more concentrated effort to encourage business growth and development.