Hogan’s Big Decision

No, it’s not the Purple Line.

It’s about a much smaller tax bill that will speak volumes about the sort of Governor that Larry Hogan intends to be. Equally important, does the Governor want Marriott to stay in Maryland?

Marriott is the second largest corporation located in the State of Maryland. It has made a relatively small ask of the State that should be an easy lift for any pro-business governor, particularly one who has made recruiting new business and jobs the central theme of his administration.

Specifically, Marriott has asked the Governor’s support for a bill that would ensure that online travel companies pay the State the same in taxes as brick-and-mortar companies. Currently, when you buy a hotel from an online travel company like Expedia, you pay taxes and fees equal to what you would pay in taxes if you bought the same room directly from from the hotel.

Sounds good except that Expedia is only passing on the tax for the rate that it paid the hotel for the room–not the tax on the full rate you paid. Expedia pockets the difference, leaving the State poorer and Marriott at an unfair competitive disadvantage.

It’s not even clear that this is legal. A bill sponsored by Sen. Rich Madaleno (D-18) and passed by the General Assembly that would correct this problem currently sits on the Governor’s desk and awaits his signature.

Having the same taxation rates for people engaging in the same economic activity is the only way to ensure the fair competition that is vital to a healthy free market. But Grover Norquist has declared this a tax increase, making life difficult for anti-tax Republicans, like the Governor, who has made sensible past statements indicating that he doesn’t view it that way.

So the Governor has to make a choice. Does he want to continue down the pragmatic, center-right policy lane that he has followed so far? Or will he hew to the demands of national conservative ideologues?

Signing the bill is right economically because it creates a level playing field and prevents online companies from pocketing monies that they were never supposed to gain. It sends a clear direct signal from Maryland to Marriott that we want you here.

Politically, it sends a message that Hogan is going to continue his practical pro-business agenda. Unfettered by the demands of national conservative ideologues–who are a lot less popular than his steady movement toward cutting taxes and reining in the structural deficit–Hogan will continue to do confidently what he sees as best for the State. In short, he’ll stand up to anyone for Maryland.

Hogan’s decision will send a strong message not just to Marriott but to the State.