EXCUSE THE INTERRUPTION BY A MARYLAND TAX ON SMALL BUSINESS! 2008 will be a new year for perspectives. One example of a new perspective is technology and its computer component to which many professionals and executives participate. As one who has limited "techie" skills, I am dependent on skilled computer repair professionals. Should such labor services be subject to Maryland Sales Tax? NO!

Computer technology has been temporarily but rudely interrupted by Maryland's Legislature and its Governor. At the conclusion of a happy family Thanksgiving gathering, I stopped by a neighbor's house. Part of that pleasant neighborhood visit was a not so pleasant discovery from a guest who started a computer services business in Baltimore that exports to other states and overseas. This business owner told me that he was "amazed to find that, in its quest to find 'soft targets' to raise tax revenue, the Maryland Senate Finance Committee has arbitrarily decided that a Maryland sales tax should now apply to computer services companies, most of them small in size".

My friend's firm has two offices, one in Baltimore and the other in Pennsylvania. As the owner of this small business, his decision may have to be " to have no future services performed or billed out of the Baltimore office, should the tax be levied on this type of service business". Furthermore, he noted that that if the tax is levied, he will have to ask his existing employees "to move to Pennsylvania immediately." The matter is of such concern to this businessperson that he may have to discourage other computer business executives from locating or expanding in Maryland.

A similar concern was expressed in today's Daily Record Opinion page by another small computer services owner, Stephen Kolbe, President of a local IT consulting firm staffed by 30 employees, most of whom live and work in Baltimore County. Mr. Kolbe added that the computer service industry has been provided with "practically no notice or means to offer commentary on this matter".

What is the message for taxpayers, small business managers and citizens in Maryland? The answer is clear: It is a mistake for Maryland's economy AND its taxpayers.

Another service business has a "special session" challenge: auto repairs. As a member of the Board of Directors of AAA Mid-Atlantic which represents thousands of automobile drivers, I volunteered to assist our regional association in blocking such a discriminatory tax against auto repair firms in Maryland. This Maryland tax would have been in contrast to the other states served by the national AAA.

Like cars made more complex by computer technology, the service providers for home and small business computer users are increasingly essential to the public. Not only is the customer hurt, but also his service provider. That service provider is often not the multi-state corporation that gives CEO's a huge bonus when bad business results actually warrant that exec's departure. We are talking about SMALL businesses, like the one my friend started on his own creative skills and management.

The danger of this kind of tax getting final approval by the Md. Legislature in the upcoming session is clear. It reflects the questionable maneuvering to place a special session as a detour by Senate President Mike Miller, House Speaker Busch, and Governor O'Malley, around an honest effort to reduce government spending and apply the tax increases fairly. Maryland is no longer a heavy industry state. New technology and health care are critical to our economic future.

Would Miller and the trial lawyers ever permit a tax on legal fees? Not likely, as proven by the skilled maneuvering to prevent tort reform in reducing the excess lawsuits against doctors. The necessity for legislative responsibility is increased for less of a "closed corporation" whereby one of the General Assembly management sets all the rules. An example of this necessity was expressed by the small computer services owner when he heard a report that the Md. Senate President has said publicly that, once elected, a State Senator has only to follow his or her views rather than the needs of the taxpayer electorate. The computer service sales tax is an intrusion on those needs.

Let us remember and apply the same lesson that helped create this State of Maryland and the American nation: "TAXATION WITHOUT REPRESENTATION IS TYRANNY".

Labels: Maryland tax on small business

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