Editor’s note: The following commentary appeared on CenterMaryland.org on January 9.
By Donald C. Fry
The Greater Baltimore Committee is proposing that the state create a new tax credit for “angel” investors in early-stage businesses in Maryland.
The tax credit proposal is the signature initiative of a legislative agenda for strengthening Maryland’s competitiveness for economic growth and job creation that the GBC will be urging lawmakers to embrace during the 2015 Maryland General Assembly session that begins January 14.
The concept of the GBC’s new tax credit proposal is straightforward. Qualified “angel” investors – typically individuals who provide capital for a business start-up – would be eligible to receive an income tax credit equal to a percentage of their investment in Maryland early-stage businesses engaged in innovation.
This year, business leaders throughout Maryland will be calling on lawmakers to follow through on their campaign pledges to make Maryland’s business climate the top priority in Annapolis.
The GBC, comprised of business and civic leaders in the Baltimore region, is urging lawmakers to enact policies to expand Maryland’s economic base, promote entrepreneurship, strengthen workforce development and fund transportation infrastructure.
The GBC’s legislative priority list for competitiveness also asks lawmakers to consider reducing business and personal income taxes, improving fiscal analysis of the impact of legislation on business costs and reforming the state’s election redistricting process.
These priorities reflect a continuing advocacy – around eight core pillars for competitiveness the GBC compiled from business leaders and economic development experts around the state – for policies that position Maryland more competitively for business growth, with an added focus on growing emerging industry sectors and fostering innovation and entrepreneurship.
The eight core pillars are: government that partners with business, a highly educated workforce, regulatory policies that are streamlined, stable and predictable, a tax structure that is fair and competitive, business costs that are competitive, superior and well-funded transportation infrastructure, strategic state investments in business growth and aggressive, well-funded business marketing.
Specifically, the GBC’s 2015 legislative priority list includes:
GBC signature initiative
- Create an “angel” investment tax credit. The GBC is proposing legislation that would offer tax credits to so-called “angel” investors in start-up businesses in Maryland that are engaged in innovation and developing proprietary technology products or services.
Other GBC priorities
- Promote entrepreneurship and innovation. Strengthen funding for the Maryland Innovation Initiative and the Maryland Industrial Partnerships Program. Maintain funding of tax credits for biotechnology investment in research and development and provide for future incremental funding increases for these tax credits.
- Nurture a 21st century economy. Support initiatives to broaden Maryland’s economic base, ease regulatory challenges by creating a “one-stop shop” to address questions about state regulations and develop policies to make it easier for Maryland businesses to export their products and services. Increase state agency use of minority- and women-owned vendors.
- Building a skilled workforce. Provide more resources and incentives for creating private-sector apprenticeship programs, increase access to adult education, create more charter schools and continue to fully fund Maryland’s K-12 public school system.
- Transportation infrastructure. Fully fund the Red Line in the Baltimore region and the Purple Line in Maryland’s D.C. suburbs. Develop a 10-year strategy for state investments in all areas of transportation and ensure balanced funding of highway and transit needs.
- STEM education. Focus on attracting and retaining high-quality educators in science, technology, engineering and math (STEM) subjects. Increase opportunities for real-world STEM experiences among middle school and high school students and ensure that Maryland’s K-12 STEM curriculum is aligned with college and business standards.
- Tax fairness and competitiveness. Strategically reform Maryland’s tax structure. Implement a single-sales factor for determining income tax for all Maryland corporations, incrementally reduce the corporate income tax rate and reduce the income tax burden on business owners of pass-through entities such as LLCs. Study the feasibility of incrementally reducing Maryland’s personal income tax rates.
- Government transparency and accountability. Create an independent commission for congressional and legislative redistricting and improve fiscal analysis of the impact of legislative proposals on business costs.
It’s imperative that lawmakers convert campaign pledges to strengthen Maryland’s competitiveness as a business location into action. Only through private-sector growth and job creation can Maryland extract itself from the chronic fiscal challenges that it continues to confront.
Lawmakers in Annapolis must keep that in mind, even as they address the current deficit. It won’t be easy, but they must work together to find a way to craft and implement an outcome-based strategy that will position Maryland to leverage its many assets into the strong business growth that will drive Maryland’s economy and high quality of life in the 21st century.
Donald C. Fry is president and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland.