Maryland Gov. Larry Hogan on Wednesday outlined a plan to cut taxes on small businesses — the Republican’s latest tax-relief proposal that actually may be the most palatable for a Democratic-controlled legislature in a state striving to improve its business climate, analysts say.
Addressing the National Federation of Independent Business, Mr. Hogan championed legislation that would eliminate the personal property tax for businesses that have less than $10,000 in personal property. Currently, all businesses are taxed on the value of their personal property such as furniture, equipment and inventory. About half of all businesses in Maryland have less than $10,000 in personal property, according to officials.
“This is a burdensome tax that clearly discourages the creation of new businesses and drives existing businesses out of state,” said the governor, who was elected to office in November on a tax-relief campaign.
The initiative is one of four tax-relief proposals Mr. Hogan mentioned earlier this month in his State of the State address, his latest step in advancing an agenda unpopular among the Democratic majority in the legislature.
In addition to halting the personal property tax for small businesses, he also has proposed ending automatic increases to the state’s gas tax, which rise with inflation; exempting retired police officers, firefighters and military personnel from taxes on their pensions; and repealing the so-called “rain tax,” which charges households and businesses a fee for the amount of rainwater likely to runoff their land and into waterways.
Maryland — where Democrats outnumber Republicans 2-to-1 — implemented its rain tax, in part, to fund anti-pollution efforts in the Chesapeake Bay. The tax also represents a key legislative victory for Mr. Hogan’s predecessor, Martin O’Malley, a Democrat who is considering a 2016 presidential bid.
SEE ALSO: Larry Hogan proposes small business tax cuts for Maryland
Last week, Senate President Thomas V. Mike Miller, Calvert Democrat, predicted that none of Mr. Hogan’s tax-relief proposals will pass the General Assembly.
But lawmakers could be drawn to support the personal property tax initiative to help to address negative perceptions about Maryland’s business climate, said Todd Eberly, a political science professor and coordinator of Public Policy Studies at St. Mary’s College.
“This just seems like, of his proposals for tax relief, this is the one that is most likely to start moving,” Mr. Eberly said, noting that legislation specifically addresses small businesses rather than large companies and could equate to “good political payback” for lawmakers who support the tax exemption.
Similar bills in the state House and Senate already have a total of 59 co-sponsors and bipartisan support.
“This legislation would help 70,000 businesses. I can’t imagine that there would be any push back,” said Hogan spokeswoman Erin Montgomery.
A report released last week by the Maryland Economic Development Business Climate Commission noted that “the State’s tax policies serve as a deterrent to businesses considering expanding in or relocating to the State and impede the economic viability of existing businesses.”
SEE ALSO: Larry Hogan appoints Pallozzi as State Police superintendent
The analysis could give Mr. Hogan more cover to pursue tax relief involving businesses than tax cut proposals addressing other issues, including cuts to a tax on gasoline and stormwater runoff that have already raised the ire of Democrats, Mr. Eberly said.
“We strongly support this important effort, believing Maryland must reduce the tax burden small businesses are facing,” said Brien Poffenberger, president of the Maryland Chamber of Commerce. “We are excited about this and other efforts that Governor Hogan is championing as part of his commitment to make Maryland more business friendly.”
Also this week, Mr. Hogan appointed William Pallozzi as superintendent of the Maryland State Police, a position that could have sway over the state’s gun licensing regulations.
A 25-year veteran of the agency, Mr. Pallozzi said he hasn’t had any specific discussions with Mr. Hogan over Maryland’s gun laws and that his first and foremost task will be to deal with the agency’s financial needs.
But gun rights groups are hopeful that under a new administration, the Maryland State Police would loosen gun licensing regulations — specifically concealed carry applications.
“If we had to pick one thing the superintendent could change, it would be the definition of ‘good and substantial’ for a carry permit,” said Dan Blasberg, of the gun rights group Maryland Shall Issue.