Monday, May 4, 2015

Why It Is So Difficult to Operate a Business in Baltimore

Jay Steinmetz is a former member of the Maryland Small Business Commission and is the CEO of Barcoding Inc. His firm is located in the heart of the area of Baltimore where most of the recent unrest took place. 

He took to the pages of WSJ to tell us that " on any given day what takes place in this neighborhood is a slow-motion version of recent events. Graffiti, which anyone with experience in urban policing will affirm is the first sign of trouble, regularly appears on the exterior of our building. From there the range of crimes escalates to burglarizing cars in the parking lot, and breaking and entering our building."

Steinmetz goes on:
Baltimore fares even worse than other Maryland jurisdictions, having the highest individual income and property taxes at 3.2% and $2.25 for every $100 of assessed property value, respectively. New businesses organized as partnerships or limited-liability corporations are subject, unusually, to the local individual income tax, reducing startup activity.
The bottom line is that our modest 14,000-square-foot building is hit with $50,000 in annual property taxes. And when we refinanced our building loan in 2006, Maryland and Baltimore real-estate taxes drove up the cost of this routine financial transaction by $36,000. 
State and city regulations overlap in a number of areas, most notably employment and hiring practices, where litigious employees can game the system and easily find an attorney to represent them in court. Building-permit requirements, sales-tax collection procedures for our multistate clients, workers’ compensation and unemployment trust-fund hearings add to the expensive distractions that impede hiring.
Harder to quantify is the difficulty people face who want to live here. Our employees reduce their tax burden and receive better public services in the suburbs. I live in the city, however, and it is a challenge to stay here. My two children attend a public elementary school where classrooms are filled beyond capacity with 30 or more students. Bathroom stall doors and toilet-seat lids are missing.
On top of this, as I have pointed out in an earlier post, the former Governor of Maryland Martin O'Malley, who appears ready to compete against Hillary Clinton for the Democratic presidential nomination, before leaving office signed a bill that will cause the minimum wage to escalate for years to come. Thus, this further burdens business who dare attempt to operate in this land of urban primitivisim.

High taxes, a high minimum wage and suffocating regulations is not an environment that results in growth and creativity. It is government madness of the first order.


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