Tax breaks to promote manufacturing dead for session

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By Len Lazarick

Len@MarylandReporter.com

Tax breaks to encourage new manufacturing operations in Maryland are dead for this session, after the Senate Budget and Taxation struggled to come up with compromises that would please all sides, especially current manufacturers.

The committee was working on SB181 sponsored by Sen. Roger Manno, with all but three members of the Senate co-sponsoring the legislation. The prospects of the legislation seemed to get an extra boost when Gov. Larry Hogan made a similar package of tax breaks creating Manufacturing Empowerment Zones, SB386, one of his top legislative priorities.

The key elements of both bills were eliminating the corporate income tax for any new manufacturer in Maryland, and eliminating the state personal income tax for any new employees for a similar period. Counties could also waive property taxes.

Hogan’s bill applied only to Maryland’s poorest jurisdictions — Baltimore City, far western Maryland and the lower Eastern Shore. Manno’s bill initially applied to the whole state, but he had agreed to make it a pilot program in seven counties.

But Manno, D-Montgomery, and Sen. Andrew Serafini, R-Washington, a key ally on the committee, met with B&T Chair Ed Kasemeyer Thursday morning, and they determined to hold the bill.

The committee had already held three work sessions on Manno’s bill. One of the key sticking points was the tax exemption for employees. Manufacturers currently operating in Maryland had told the committee this would allow new businesses to poach their key employees.

Sen. Ed DeGrange, a B&T subcommittee chair, said at a work session Wednesday that he had heard from businesses that “they actually are harmed” by the tax breaks and he was concerned.

Among several competing compromises, Manno agreed at that session to have the income tax exemption apply only to workers making less than $15 an hour, but that may not have been enough of a concession to move the bill.

“I was unwilling to move from my position that the workers receive the same benefit as the corporation,” Manno said.