Click here for Part I, Part III, Part IV, Part V & Part VI

Building connections between Maryland’s businesses and the people who represent them in government

Scott Dorsey is the CEO and chairman of MBRG—Maryland Business for Responsive Government. Duane Carey is the organization’s president. Since 1985, MBRG has educated the members of Maryland’s political and business communities on the questions, challenges, and opportunities facing the state’s private companies, with a focus on holding elected officials accountable to the overall goals of an improved business climate and sustained job growth. A nonpartisan institution, MBRG is supported by corporations, trade associations, chambers of commerce, and individuals.

EDWIN WARFIELD: MBRG recently published the Augustine Commission Report, a bipartisan document making policy recommendations for state lawmakers. What were some of the highlights of that report?

SCOTT DORSEY: The Augustine Commission Report was actually issued in two parts. The first phase of the Augustine Commission Report focused on business friendliness, positive attitude—and those are all very significant. Regulation, which is a problem not just in Maryland but across the country.

The second phase of the Augustine Commission Report, which was commissioned by Speaker Busch and President Mike Miller was based on “How can we improve the economic climate in Maryland?” The tax piece basically is recommending some pretty significant changes to the way we tax the citizens of Maryland.

The book Wealth of States is a very powerful exploration of the effect of personal rates of income tax and the raise of economic growth within a state. There’s a strong correlation where high-tax states tend to have low growth—remember, low growth means limited opportunity. There are couple of other factors. Oviously, the state tax in Maryland is very negative—a lot of people are moving to Florida, South Carolina, Texas and other states.

But the way I see the relationship between taxes and economic growth—it's almost the way that the nuclear reactor works. You have dampening rods, and when you push those dampening rods into that reactor, you slow down the reaction and things just reach a state of stasis. Whereas when you pull those dampening rods out, things start to happen. You get more energy, more reaction within that reactor. The taxes to me are like a dampening rod for the economy. It's not taxing the rich. It’s the idea that when you’re in a high tax environment, you actually slowdown that economy. One reason why high-tax environments are terrible for a state is because people can move relatively easily from one state to another. We see an awful lot of retirees moving from the eastern shore of Maryland to Delaware. Generally, we’re not talking about a lot of wealthy people. They’re people that are going to live in one place; they’re not the same people moving to Florida. But if, say, a husband and wife are trying to retire on an income of maybe $60,000 a year with their Social Security and their pension, it’s dramatic how much farther you can make that money go in Delaware.

What really frustrates me about the tax environment in Maryland is it’s self-inflicted. We could establish policies that would encourage growth and would be to the benefit of all Marylanders—not just the wealthy people that are moving to Florida, but everybody that’s living in the state of Maryland could have a higher standard of living if we would take a look at the lessons of taxation as set forth in wealthier states. That’s exactly what the Augustine Commission did. The recommendations of the Augustine Commission, which have not been implemented by the legislature as of yet, lay out a roadmap for how we can increase prosperity in the state, but we just haven’t been able to get that done yet.

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Edwin Warfield, CEO of citybizlist, conducts the CEO Interviews.

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