Cutting the Corporate Income Tax Will Not Bring Broad Prosperity to Maryland

A corporate income tax cut would rob Maryland of crucial resources for higher education, transportation and other services vital to a strong economy, while failing to produce the broad prosperity supporters predict. The tax cut would largely benefit high-income households and large, profitable corporations, and the cost is not worth the price. Given the need to balance the budget, Maryland residents will pay for a corporate income tax rate reduction through spending cuts or increases in other taxes that would cost middle-class and low-income families more than wealthier families.

The corporate income tax accounts for less than 1 percent of business costs in Maryland, but it is an important source of revenue that helps Maryland balance its budget and supports investment in public colleges and universities, our roads, the legal system, and other amenities and business supports. For over a decade, it has been Maryland’s third-largest source of revenue, with three quarters of the funds raised by the tax going to the state’s general fund – helping to balance the budget – while about 25 percent has gone to special funds designated for a particular use. Since 2007, all corporate income tax revenues designated to special funds have gone to transportation or higher education.

Companies want to do business in states with reliable and efficient transportation networks and other infrastructure, and where they can hire well-educated and healthy workers. Reducing the corporate income tax rate will only make it more difficult for Maryland to fund the services and infrastructure that businesses rely on, without boosting the economy.