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DIGGERS: Help REPEAL the computer services tax!

marylandneedsit.org — Literally overnight - with almost no input from the industry - a 6% tax on computer services was levied against all "computer services" in the state of Maryland. Think about the adverse effects on the state's economy and on people like you and me. Visit this site, fire off an email to some state delegates, and help us repeal this tax!

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  • AndrewMHagan, on 01/24/2008, -1/+4It's a shame that the Maryland State government felt the need to impose a tax on Computer Services in Maryland. Computer Science and Engineering is a field of work that Maryland has intelligently fostered through the various public universities that excel in that line of work. Considering the incredible labor force that Maryland's public schools are creating, it should be harmful to have all of these well trained, intelligent professionals move to another state in order to find work. Maryland needs to understand that the employment of all of these white collar workers, whose above average salary ( meaning the taxes they pay are also already above average), enables them to purchase houses, cars, and otherwise help fuel Maryland's economy.
  • protogenxl, on 01/24/2008, -0/+5What a great way to chase out Small Businesses
  • Aeudian, on 01/24/2008, -1/+3I work in Baltimore, MD with a small staff of dedicated IT staff that support multiple corporations that do not have an on site IT staff, which could be for many reasons but typically do not have the finances to have a dedicated person on site 24x7. Now clients will look twice at labor projects especially if they are high numbered because of taxes. Way to go Maryland, destroy all small business IT staff companies.
  • werkerb33, on 01/24/2008, -1/+3Just what Maryland needs: a regressive tax aimed at harming small, minority and veteran-owned businesses in the midst of a recession.

    I spoke with Senate President Mike Miller's office regarding this issue (Mr. Miller happens to be one of my state reps). Spoke with a Ms. McDonaugh (apologize if I spelled her name incorrectly).

    She made it clear that Senator Miller is in full support of taxing our small business firms here in Maryland. I politely pointed out several facts:

    - Most companies affected by this law will be small consulting firms that support larger Systems Integrators that serve federal government prime contractors
    - Under the law, the large IT integrators are not affected because their prime contract with the feds exempt them from state sales taxes
    - Under this law, subcontractors on those same contracts ARE subject to the tax
    - Large IT firms can easily contract custom development to Virginia companies...or for that matter any company anywhere but Maryland and avoid the tax

    Why is this so harmful? I mean, we can just pass the tax up the food chain, right?

    Wrong. The nature of these services is such that many can be performed from out of state. If custom programming can be done in India, you bet it can be done from California or Virginia (the most likely benefactor in this mess). This means that a Maryland company who is competing on a dollar basis with a non-Maryland firm must absorb this cost to stay competitive. Customers argue over 1% of price...6% is not even worth the discussion. They'll just pay someone else and save the money.

    A Maryland firm that "eats" this tax to stay competitive loses far more than 6% -- the tax is computed on the gross sale and not on profit. That means the tax comes directly out of profit, in our case it will be high. So high we would be forced to give up some (now unprofitable) business or move.

    Mr. Miller's office said that they understood and actually agreed with my points. They know who this hurts and do not argue with my contentions. So I asked the question point blank: "Could you please explain why Mr. Miller supports a regressive tax that harms small, minority and veteran-owned technology firms in Maryland?"

    There was some silence on the phone after that one. The answer was (and I am paraphrasing somewhat): the money has to come from somewhere; and this is to avoid hurting the "Middle Class".

    News Alert for the Senator: The people hurt here are the middle class. Huge corporations will simply book the revenue and perform most services out of state. Large prime contractors are immune. The small Maryland entrepreneur gets nailed to the boards. We are the middle class. We do not have billion dollar market caps. We are going to get hurt.

    Unfortunately this is more than a company problem: when we move our firm to Virginia I will have no choice but lay off any employee that does not make the move with us.
    • strictnein, on 01/24/2008, -0/+1How, exactly, does this harm minorities and vets any more than it does any other group of people?
      • hgom, on 01/25/2008, -0/+1Many IT contractors to the "big integrators" are owned by minorities and vets and carry special status with the GSA and the SBA and are targeted for business and growth. Having said that, there is stiff competition for opportunities nonetheless and it's far easier for the big integrators to take the work out of State than it is to pay 6% more for it and far harder than that for the minority and veteran-owned companies to take a 6% hit.
  • julieandcompany, on 01/24/2008, -0/+2Good God, what is the state of Maryland thinking? The answer to the gazillion-dollar shortfall in tax revenue is more business, NOT more taxes. We're in a recession, guys - wake up and smell the economic meltdown! Then watch all the tech businesses flee to Virginia, Pennsylvania, Delaware, and DC. Remind me again why I voted for O'Malley? Between this and the incredibly regressive sales tax increase, all I can say about O'Malley is: NEVER AGAIN.
    • werkerb33, on 01/24/2008, -0/+2Please call the gov's office and the office of the Senate President (Miller) and all your reps. Tell them you have votes and (scarier for politicians): money. Both will go to fighting this law and anyone who supports it.
  • strictnein, on 01/24/2008, -0/+3Had to google for this information:
    Martin O'Malley (D)
    Surprising, no?
  • Error601, on 01/25/2008, -1/+2Not bad for us in VA because it will push business across the border our way.
  • deadfool, on 01/25/2008, -0/+1blame governor O'Money. Can't wait to leave this ***** hole.
  • AndreCodemonk, on 01/25/2008, -0/+1Maryland Computer Services Tax is yet another example of government's tendency to shoot before thinking. Or... Can they think at all? For the lack of precedent, I find that rather doubtful. Let's see then... Impose the tax and businesses will leave. Here goes Maryland's ability of taxing IT services. As businesses leave, thousands of IT professionals follow, taking their income tax otherwise paid in Maryland elsewhere. So, dear state of Maryland, there are 49 other states in the Union for IT professionals to choose from, Virginia being less that an hour away, whereas you'll stay selling those crabs of yours that likely becoming your only revenue rather soon.
  • rkjerome, on 01/25/2008, -0/+0I am astounded at the arrogance shown by Mike Miller but as long as powerful individuals have no balance to their power, I am afraid they will never listen to reason. "Ready, fire, aim" should be the theme of the Maryland Government. I am the owner of a small IT consulting firm and most of my work is done through larger firms and ultimately to the federal government. In short, this tax will ruin me and nobody cares.
    Though bill 196 was introduced with the sponsorship of 72 delegates (Democrat and Republican), I strongly doubt that it will get a vote in the senate. This is all politics. God forbid the Governor came out and said, "You know what, I made a mistake and I am now going to correct it by supporting a repeal." Instead, he is going to stick to his guns.
    I just can't believe they actually did this. They are always talking about protecting the "little guy" and now they are going to drive the little guy into the ground. I am so glad I moved out of New York, went to school in Maryland and started a business here. What was I thinking?
  • mitchelllll, on 02/01/2008, -0/+0Our communications firm is helping to get the word out about this website created to help the effort: http://www.fightthetechtax.com. Thanks for linking to this and/or http://marylandneedsit.org. Any other ideas or pointers are also appreciated.
  • mitchelllll, on 02/01/2008, -1/+0let me try those links again...

    http://www.fightthetechtax.com

    http://marylandneedsit.org
  • mitchelllll, on 02/01/2008, -0/+0We're also looking for those willing to share how this tax will impact their business. The tech Council of Md will pass the stories along to legislators. if you're interested in sharing, send an email to: mitch@techcouncilmd.com Txs...
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