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Maryland computer firms anxious over new tax
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Services that will be taxed include support services, computer programming, consulting services for computer systems design and disaster recovery.
“I’m being asked to levy a hefty tax on my clients, and the thing that really aggravates me is that Virginia computer companies won’t impose this on their Maryland clients,” said Matthew Shapiro, president of Rockville-based networking and integration firm Design One Corp. Shapiro doesn’t want to physically move, but he does want to consult with a lawyer about setting up a subsidiary outside the state.
The tax caught many in the technology industry off guard.
Tech Council of Maryland Chief Executive Officer Julie Coons said she was “shocked” the tax actually passed, because at one point she was “assured it would not move forward.”
Some say the tax package is a fiscal necessity.
“Broadening the sales tax was something Maryland really had to look at,” said Richard Clinch, director of economic research at the University of Baltimore’s Jacob France Institute.
Others disagree.
The tax will be a “small-business tax,” as many smaller companies outsource their computer network maintenance work, said Maryland Chamber of Commerce spokesman Will Burns.
“Many computer service providers are small, fragile financially and in competitive markets,” said Anirban Basu, chairman and chief executive officer of the Baltimore-based Sage Policy Group Inc.
The state is expected to net about $200 million from the tax, according to Christine Hansen, a spokeswoman in the governor’s office. Maryland Comptroller Peter Franchot, who will enforce the tax, is against it, and he pointed out that Pennsylvania and Florida repealed similar taxes in a letter to House Speaker Michael Busch.
The Associated Press contributed to this article.
wblake@dcexaminer.com
Comments from Examiner Readers
2:51 AM MST on Sun., Jan. 20, 2008 re: "Maryland computer firms anxious over new tax"
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7:40 PM MST on Sat., Jan. 19, 2008
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10:13 AM MST on Tue., Dec. 4, 2007
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9:35 AM MST on Mon., Dec. 3, 2007
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The Undertaker said:
I have a better idea - legalize and tax marijuana.
90 agree | 93 disagree
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Examiner Reader said:
Poor Maryland! Soon everybody will be leaving. But where will they go? Its practically the same problem in every state. No more outrageous returns in tax receipts from housing taxes, uh, you know, since the value of housing has dropped severely. It would be funny if it weren't so sad, this equivalent of arguing over who is rowing the boat, even as the little boat is heading over the falls. Both parties are to blame, sold out to corruption a long time ago.
92 agree | 95 disagree
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Examiner Reader said:
As a small business owner doing computer consulting and programming this changes our overall financial picture and will make it harder for us to survive. It means more paperwork (overhead) and more than just adding the tax to our fees. The only way to handle the tax is to pass the tax and its maintenance costs on to our clients and that means increasing the rates we charge.
108 agree | 106 disagree
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Examiner Reader said:
You've got it all wrong...taxes help people...they never hurt them. Why would we want a government with limited involvement in our affairs?
108 agree | 116 disagree
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