Overview

Harms ALL Businesses in Maryland

This new tax, which takes effect in July, will put many Maryland businesses at a severe disadvantage. Innovation fuels business growth and job creation, but it can be expensive and risky. So it's often the last thing a business invests in, using the final dollars of its technology budget...if any remain. But now those final dollars will be diverted to the tax, significantly curbing investment in innovation and dampening job creation across industries.

Drives Computer Services Jobs and Firms out of Maryland

The tax will most deeply affect the computer services industry. Many customers simply will not be willing - or able - to absorb a 6 percent tax, and will seek price concessions or consume fewer services. To bypass the tax, large customers may stop issuing contracts for certain computer services and instead perform the work in-house. Customers with locations in multiple states will avoid the tax entirely by having their non-Maryland offices hire non-Maryland vendors. These actions will decrease demand for in-state computer services providers and send higher-paying technology jobs to neighboring states, or even other countries.

Some computer service firms follow business models that allow a profit of only 7 percent of revenue. Other companies - including those having a bad year or investing heavily in their future - sometimes earn a profit of less than 5 percent of revenue or even take a loss. Add a 6 percent tax on revenue, and these companies may have no choice but to leave Maryland or cease operations entirely.