Small Businesses Worry O'Malley's Tax Credit Won't Help


ANNAPOLIS (Feb. 05, 2010) - Gov. Martin O'Malley's proposed job creation tax credit may have the support of several business associations, but some small business owners are saying it won't help.

"How in God's name is a tax credit...going to help me?" Tony Passaro told the House Ways and Means Committee Thursday. "I don't have anything for (a new employee) to do."

The proposed legislation would offer a $3,000 tax credit to businesses that hire unemployed Marylanders. Employees would have to be receiving unemployment benefits or have exhausted their benefits within the past 12 months to qualify.

Employers could claim the credit for each new employee, up to $250,000.

The credit would only apply to employees hired between Jan. 1 and Dec. 31, 2010. The legislation is estimated to cost $20 million, with $19 million coming from the general fund and $1 million from the Transportation Trust Fund.

The credit legislation is part of the jobs creation package heralded in O'Malley's State of the State address Tuesday.

Passaro, who co-owns three fitness centers, is also an organizer of the Bel Air Tea Party Coalition and promoter of several tax protests. He was one of several witnesses who said the bill was a good start but broader tax reform to stimulate business is also needed.

"My business is failing," Passaro told the committee. "I'm down 50 percent of my revenues."

Passaro said he's had to lay off half of his employees over the past year and a half because he couldn't afford them, taking his work force from 60 to 30.

"An employee costs tens, if not hundreds of thousands of dollars," said Joan Ryder, who owns a real estate firm in Bel Air.

Ryder said she has been unable to pay her own salary for more than a year because she doesn't want to fire anyone on her five-person office staff. She later clarified that the cost estimate of "hundreds of thousands of dollars" didn't specifically apply to her business.

"I need more than a tiny tax credit to counter the cost," of hiring another employee, Ryder said.

Additional job-creation incentives will definitely be needed, said Delegate LeRoy Myers, R-Washington. Myers praised the idea behind the tax credit, but said the state needed to do more to promote business.

The House bill and its Senate counterpart have both received the support of the Restaurant Association of Maryland, the Greater Baltimore Committee and the Maryland Association of Nonprofit Organizations.

About 30 percent of Restaurant Association members expect sales to pick up in 2010, said Melvin Thompson, the organization's senior vice president for public policy and government affairs.

"Some of our members will be in a position to hire this year," Thompson told the committee.

"We think this tax credit will certainly give them the incentive to go ahead and bring on (new) employees... At this juncture we're happy to take any help that we can get," Thompson said.

The Maryland Chamber of Commerce supported the bill but recommended the credit be raised from $3,000 to $5,000 to provide more incentive for employers.

Capital News Service contributed to this report.

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