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GBC calls for tax reform

Reform the tax code — it’s a common refrain in Maryland’s business community.

‘For us to be competitive, this effort has to be a compact between government and business,’ GBC President and CEO Donald C. Fry says.

Private-sector leaders aren’t shy about a view that the state’s tax structure is less than business-friendly, but now, they’re stepping up their message.

In a report released Wednesday by the Greater Baltimore Committee, the organization of business leaders made a clear statement that reforming Maryland’s tax structure is priority No. 1.

That goal and several other objectives, including re-examining the state’s spending, are outlined in the GBC report, “A Compact for Competitiveness,” which provides specific suggestions to improve Maryland’s business environment and calls on elected officials to recognize the need for change.

One of the more tangible, and immediate, actions the GBC plans to take is to convene an independent commission of private-sector leaders who will review Maryland’s tax structure and budget allocation processes, including how and why those systems got to where they are today.

They will then recommend to the General Assembly potential revenue-neutral adjustments that could be made to the tax structure to improve the business environment — without jeopardizing the state’s ability to fund important budget items.

“More than anything else, one of the most important things about this report … is that it shows that for us to be competitive, this effort has to be a compact between government and business,” said GBC President and CEO Donald C. Fry. “So once we have these recommendations, once we think we’re in a position to speak to elected officials and candidates for office — the decision-makers — we will impress upon them why it’s so important to have government and business on the same page strategically to ensure economic growth and job creation.”

The report was based on surveys of more than 250 CEOs at companies throughout the region, as well as input collected at various work sessions and the inaugural GBC Chesapeake Conference of CEOs, a day-long strategy session held in Baltimore on June 12. An “overwhelming consensus” emerged that tax reform could no longer be ignored, Fry said.

The GBC has long advocated for tax and regulatory reform, and many of the other priorities discussed in the report are familiar. Still, Fry called Maryland’s tax structure the “elephant in the room” when talking about business competitiveness — at least, when it comes to communicating with elected officials.

“When the business community and elected officials get together, there’s a tendency to talk about the good things that are happening and the progress being made,” Fry said. “We don’t always get down to the specific issues, like tax reform, and what are the best ways of doing it or the alternatives of doing it. Often, there aren’t many direct recommendations actually being made for how to do things differently. That’s what we’re hoping to do through this study.”

Maryland has a corporate income tax rate of 8.25 percent; for comparison, Virginia’s is 6 percent; Delaware’s is 8.7 percent and Pennsylvania’s is 9.99 percent, according to the nonprofit Tax Foundation.

Fry said the GBC hopes to select members for the commission within the next several weeks; final recommendations would likely be made in late spring.

But finding common ground on such polarizing issues as tax policy might not be a walk in the park. Most recently, several Maryland gubernatorial candidates sparred over the corporate income tax rate, prompted by a comment by Douglas F. Gansler, a Democratic hopeful for governor and the current attorney general.

Gansler, in a departure from his party’s usual stance, remarked late last month he would like to reduce Maryland’s corporate tax rate from 8.25 percent to 6 percent, to put the state on equal footing with Virginia and attract more corporations. The other candidates offered a range of other views, such as keeping the rate steady or dropping it to as low as 4 percent.

The report also identified regional issues in Baltimore and surrounding jurisdictions, and discussed ways to increase collaboration between them.