Proponents of the manufacturing tax cut pushed by Governor Larry Hogan and many legislators in the General Assembly received major pushback from existing manufacturers. The Regional Manufacturing Institute (RMI) of Maryland has issued a letter with a detailed critique of a proposal for manufacturing tax cuts. Here is a copy of the complete letter from RMI.
Key aspects of the proposed tax cut include (1) a ten-year exemption from state taxes for new manufacturers, and (2) a ten-year exemption of workers in these companies from state taxes who earn up to $65,000. In the version of the bill referenced in the letter, the tax cuts would occur only in special zones designed to attract heavy manufacturing to Maryland.
RMI fears that the proposal would undermine existing manufacturers in the State:
A major unintended outcome will be that Maryland companies will lose workers who would seek positions with companies that qualify for 10 years of no income tax for workers. This would be a serious blow to smaller and medium sized companies that in some areas would put companies out of business. Engineers, machinists, line workers, technicians working in manufacturing would jump at the chance to work for a company and not pay state taxes for 10 years. Maryland has a serious shortage of workers and this would make it worse for existing companies. Companies who employ machinists would be hard hit if the new companies hire machinists.
Instead, RMI suggests an array of incentives to keep existing manufacturing in Maryland and to encourage these manufacturers to move subsidiaries here. Their suggestions include several designed to aid not just the firms but also workers, such as support for training and college tuition for workers and their families. Additionally, RMI supports drug rehab centers with manufacturing training and access to available manufacturers.