The Problems of NM’s Gross Receipts Tax Come to Maryland

The Rio Grande Foundation has long decried New Mexico’s economically-destructive Gross Receipts Tax and urged other states to avoid our mistakes.
Unfortunately, at least in Maryland, that message seems to be falling on deaf ears. That state recently decided to levy a 6 percent tax on companies that provide computer support services, computer programming, consulting services for computer systems design and disaster recovery.
Critics say the tax will be a “small-business tax,” as many smaller companies outsource their computer network maintenance work. Of course, those who like bigger government call the $200 million tax hike a “fiscal necessity.”
One would think that Maryland, a state with the 5th-highest personal incomes in the country would not be taking economic policy cues from New Mexico, a state with the 45th highest personal income level in the nation, but revenue-hungry governments are not known for their discretion. If Maryland is wise, they will refrain from adopting the rest of New Mexico’s GRT “model” which includes rates as high as 8 percent and includes nearly all services, not just those related to computers.