Manufacturers say this act will boost manufacturing in Maryland, but one nonprofit isn’t convinced – Baltimore Business Journal
Five years ago, Drew Greenblatt took then state Sen. Allan Kittleman, now Howard County Executive, and state Sen. Katherine Klausmeier on a tour of his Baltimore factory.
After, the senators asked Greenblatt, CEO of Marlin Steel Wire Products, what they could do to help manufacturing in the state. He said instant expensing was the No. 1 thing.
Instant expensing, also known as accelerated depreciation, allows businesses to write off expensive assets in the same year they are purchased rather than in small increments over a period of time. It is used for depreciating assets that have a short lifespan such as machinery.
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While the change to the act may have quelled the concerns of manufacturers, the nonprofit Maryland Center on Economic Policy, is opposing the new bill. Benjamin Orr, executive director of the Maryland Center on Economic Policy, said his nonprofit believes the tax incentives would give some businesses an unfair advantage over others, overlap with previous initiatives, do little to create jobs and force cuts to investments in education, transportation and safety.The organization submitted a written testimony to both the House and the Senate committees outlining its reasons for opposition.
“Any direct stimulative effect from these tax breaks is likely to be minimal,” the testimony reads, and will likely make the companies ineligible for the breaks less competitive, yield weaker profits and tax payments, and hire fewer employees.
Giving preferential treatment to manufacturers over other businesses is misguided, Orr said. Especially because Maryland’s tax code currently allows manufacturers to not pay taxes on income earned from selling products out of state. Programs similar to the act, such as Enterprise Zones and One Maryland, have also proven to be “ineffective” in creating additional jobs, the testimony reads.
Orr also said that because taxes are a minor cost for most businesses, they do not drive a company’s decision to move. Companies are more likely to move where there is a skilled workforce, reliable transportation and a high quality of life.
