ANNAPOLIS – University students and administrators from across the state clashed with Maryland business leaders yesterday over a proposed corporate tax hike aimed at funding higher education.
In hearings before a special session of the state legislature, business owners argued Democratic Gov. Martin O’Malley’s proposed 1 percent corporate tax hike would cost the state too many jobs and force companies to move elsewhere.
“It is one of the most damaging ways to provide funding,” Karen Syrylo, an accountant for the Maryland Chamber of Commerce said in written testimony.
She cited a report from New York-based Ernst & Young an auditor, which determined in a September report that the corporate tax increase would be the second-worst portion of O’Malley’s budget proposal in terms of job losses.
Student Government Association President Andrew Friedson, who led a rally of Maryland students earlier in the day in support of the tax plan, countered in his testimony that corporations in Maryland would ultimately benefit from funding higher education.
“Higher education has a natural link to the corporate world,” Friedson said. “The corporate world relies on the education of its potential workforce in order to succeed.”
Ulysses Currie (D-Prince George’s), a chair of the joint committee hearing all the governor’s proposals, limited statements to two minutes each because of the number of people who signed up to testify.
But when students took their seats before the legislators, he told them to take as long as they needed.
O’Malley proposed a massive tax restructuring aimed at closing the state’s $1.7 billion deficit last month. The plan includes a 1 percent tax increase on corporate income, half of which O’Malley proposes go to higher education. The other half would go toward transportation.
Cuts to the state higher education budget forced a string of tuition hikes at state universities under O’Malley’s predecessor, Republican Gov. Robert Ehrlich. And the looming deficit has raised the prospect of further raising tuition next year.
Legislators have said they will begin to consider the wording of O’Malley’s proposal starting next week when all the testimony will have been heard.
Representatives of several Maryland-based businesses, including Mariott International, headquartered in Montgomery County, spoke out against the plan. They raised concerns about a provision aimed at closing a loophole that allows corporations to place assets in other states to avoid paying taxes here. The cost of not being able to find lower tax rates in other states could translate into job cuts, they said.
Not all business leaders have balked at the tax increase, though.
Keith Losoya, Executive Director of the Chesapeake Sustainable Business Alliance, which represents 178 small businesses, spoke in favor of the measure yesterday.
“Like most businesses, our members often speak of taxes in strings of four letter words,” said Losoya during testimony. “But we also realize that taxes are the price we pay for a decent, civilized and compassionate society.”
Richard Scott, the student on the Board of Regents, which governs the University System of Maryland, agreed.
“This should not be seen as a tax,” he said during testimony. “But truly an investment in Maryland’s future that will provide steady and significant dividends in the years to come.”
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