As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
One of our clients recently asked about credits and incentives for their location in Maryland. I was able to speak with some Maryland economic development professionals and learned some of their details (Maryland Dept. of Business & Economic Development site click here).
Maryland does not compare favorably with most other states due to its high corporate tax rates, among other high cost factors. Maryland ranks 40th in the The Tax Foundation’s 2014 Business Tax Climate Index (click here).
Maryland offers a moderate collection of incentives, credits, and funding programs to assist businesses in locating or expanding in the state. Incentive $ amounts are generally far lower than other competitive states. However, a few large $$ discretionary incentives are available for large business location and expansion projects. Statutory income tax credits are fairly limited in scale and not very competitive with other states. Special Zones provide somewhat larger benefits plus reduced property taxes and other incentives.
One consideration — an application and approval process is required for almost all of Maryland’s primary incentives. And, Maryland’s credits and incentives can be more complicated than other competitive states.
Compared to Georgia, Maryland has:
- Higher taxes: Much higher corporate income taxes. Much higher personal state & local income taxes. Higher sales taxes and higher property taxes.
- A narrower range of industries eligible for incentives if adding jobs, a far narrower range for capital investments, and far fewer incentives for training and workforce development.
- NO opportunities for incentives unless pre-approved by state officials.
- Location, location, location — if that’s what is important to the business
To summarize, Maryland is not highly competitive for new and expanding businesses, unless those businesses really need Maryland’s prime location for government markets, corporate headquarters, transportation and culture.
Do any of your clients have Maryland connections? Make sure you review their potential qualifying activities early to maximize their $$ benefits!!