(Business) climate change

Business Gazette , Monday, May 10, 2010
Correspondent : My Maryland | Blair Lee
Scientists disagree on global warming. Is climate change natural or manmade? And can humans halt its course? I don't know.

But humans are certainly responsible for Maryland's business climate, which just lost Northrop Grumman to Virginia after an intense battle over where the giant defense contractor relocates its world headquarters.

So add Northrop to the growing list of corporations that recently rejected or departed Maryland: Black & Decker, Computer Sciences, Hilton Hotels, CoStar, SAIC, Hanger Orthopedics, Noxell, BP Solar, Hyundai, U.S. Food Services, Sweetheart Corp., NPR, Volkswagen North American.

On paper, Maryland should be a magnet for businesses and the jobs, tax base and economic spinoff they bring. We adjoin the nation's capital at the hub of the Eastern seaboard with a port, airports and a great transportation system.

We are one of the nation's wealthiest, best-educated populations with a nice mix of urban, suburban and rural venues and the Chesapeake Bay. We have NIH, NSA and, thanks to BRAC, a growing federal presence. We've invested heavily in high tech and bioscience as our economic future, and name me another small state with two NFL franchises.

But Virginia has most of the same attributes and, unlike Maryland, is business-friendly. When comparing report cards, here's what CEOs see:

-Maryland's corporate income tax is 8.25 percent; Virginia's is 6 percent. The personal income tax (highest) in Maryland is 9 percent; in Virginia, it is 5.75 percent.

-Maryland is not a right-to-work state; Virginia is.

-Sales tax in Maryland is 6 percent; in Virginia, it is 5 percent.

-Maryland is pro-labor and pro-environment; Virginia has a pro-business government.

-Regarding business rankings, Forbes' "best states" ranks Maryland No. 12, and Virginia No. 1. Tax Foundation's best ranks Maryland No. 45, and Virginia No. 15.

And Maryland's report card gets worse when we get to deportment. Corporations aren't stupid; they look beyond the numbers to see who governs and how they treat businesses. Maryland's record is frightening.

Maryland's lawmakers think and sound like university lecturers because, like university lecturers, they have little experience running a business. The days of part-time, citizen-lawmakers are over. Instead of tradesmen, farmers and shopkeepers, a full-time governing class runs things.

In the old days our governors and legislators had one foot in the public sector and one in the private sector. So, when they regulated and taxed business, from their own experience they understood the consequences. Today, our lawmakers arrive in Annapolis with no such background. They come to the public sector from their jobs in nonprofits, academia or, even worse, from elsewhere in the public sector.

Read their bios — it's amazing how many lawmakers are government employees or list themselves as "full-time lawmakers" (i.e., no other job). Insulated from the free enterprise system, this governing class, blind to the hand that feeds them, adopts a progressive, anti-capitalism philosophy that views business as the enemy.

That's why in Maryland, business is the perennial whipping boy. Labor unions can't organize Wal-Mart? Pass an 8 percent, Wal-Mart-only tax on the union's behalf, which the courts later rule illegal.

Electricity rates going up during an election year? Shake down BG&E for rate relief to make the politicians look good.

The environmental lobby doesn't like a waterfront project by a Kent Island developer who spent millions playing by all the rules? Screw him, deny his wetlands permit.

Got a $1.4 billion structural state deficit due to chronic overspending? No problem, raise business taxes, including an idiotic sales tax on computer services.

Montgomery County has a $1 billion budget deficit? No problem, double the energy tax on commercial buildings. Now a typical office building's monthly energy tax will be $10,130 in Montgomery and $2,173 in Fairfax. Gosh, wonder why Northrop went to Virginia?

Your lease with Prince George's County needs council approval? OK, just donate $40,000 to your councilman's campaign. And when he's caught, the councilman's legal defense is, "This is how things work here." Just ask National Harbor about the shakedown to obtain its liquor license.

Constellation Energy, Baltimore's last Fortune 500 company, wants to merge with a French company? Great, play chicken with them by withholding PSC approval until they cough up more rate relief.

In dealing with state government, Maryland's business community is always playing damage control. And the worst is yet to come. Next year, once safely re-elected, state lawmakers will balance the state deficit with massive tax hikes.

When Northrop went to the state of Virginia, Maryland went into the state of denial. Gov. O'Malley tried calling Maryland's loss "a win for the entire region." Sorry, you can't be anti-business until a recession hits and then, suddenly, become "The Jobs Governor." And, as the Northrop debacle proves, cash can't buy good will or a good reputation.

Businesses will go where they're appreciated, not where they're preyed upon.

Blair Lee is CEO of the Lee Development Group in Silver Spring and a regular commentator for WBAL radio. His column appears Fridays in The Gazette. His e-mail address is blair@leedg.com

 
SOURCE : http://www.gazette.net/stories/05072010/polilee181726_32555.php
 


Back to pevious page



The NetworkAbout Us  |  Our Partners  |  Concepts   
Resources :  Databases  |  Publications  |  Media Guide  |  Suggested Links
Happenings :  News  |  Events  |  Opinion Polls  |  Case Studies
Contact :  Guest Book  |  FAQs |  Email Us