EDITORIAL: REGRESSIVE NUISANCE TAXES BODE ILL:

MD Legislators Consider Stealth Anti-Small Business Taxes

The State of Maryland, like all states right now, is in a tight budget squeeze, so our legislators are considering every possible way to increase the revenue stream. This week in Annapolis, matters are coming to a head in a most alarming way-but, thanks to all the war coverage blitzing most other news reporting, the public has little or no knowledge of what lies in store.

Their ideas are so idiotic, you could almost conclude they're counting on our ignorance.

Small businesses-and by that, we mean real small businesses, like so many in Baltimore: those with no more than about 20 employees-will be hosed if the following two measures pass.

IDIOTIC IDEA #1: Our running-scared stalwarts in Annapolis are considering scrapping the Personal Property Tax structure (a ridiculous system in itself, but that's another story) in favor of a flat $400 annual tax-no matter how small a business might be, and no matter how few assets it possesses. This outrageous maneuver would disproportionately place the tax burden on those least able to pay, and would allow those with lots of personal property assets to enjoy a reduction in what they're paying now.

The personal property tax itself is an extraordinary burden for all businesses. Why should businesses be forced to pay any fee or tax at all on its equipment and furnishings? John Q. Public isn't paying any personal property tax on his big-screen TV or his Ford Expedition SUV. Mary R. Highhorse isn't paying any personal property tax on her three-carat diamond ring. Why should businesses be forced to ante up taxes year after year for the 'privilege' of possessing trash cans and file cabinets and copiers and computers?

The only plus side to the flat $400 personal property tax proposal is that it appears not to be tied to a subdivision's real property tax rate, as the old method is.

Maryland's personal property tax should be reconsidered, all right. It should be eliminated altogether. Maryland should be striving to be more attractive to businesses considering locating here, or remaining here.

IDIOTIC IDEA #2: Our revenue-lusty legislators are considering increasing the annual corporate filing fee from $100 to $250-a whopping 250% increase. Again, this will adversely impact the smallest businesses the most, as $250 represents a substantial overhead cost for a corporation with, say, $100,000 in annual gross revenue, while $250 would be a mere nuisance expense for a corporation with a gross revenue of $1 million a year. A phased-in fee structure would be much more equitable-such as staying with $100 for businesses with 20 or fewer employees, and going to $150 for businesses with 21-40 employees, $200 for those with 41-60, and so on. Better still, base the fee as a percentage of gross corporate annual revenue.

Considering the lack of careful thought evidenced in the two measures discussed here, we can probably count on some dreadful surprises come tax time next year.

That is, unless we act now to keep ill-advised laws from being passed.