Wal*Mart: Maryland is Bad for Business
Maryland has dictated that 8% of Wal*Mart’s revenue be directed by the Maryland legislature. Continuing a taxing tradition.
In the mid 90’s Your Business Blogger was President of a (very) modest software company in Maryland. Looking hard for good people and profits.
Back then I asked Rudy Lamone, a Professor of Management Science about Maryland’s confiscatory taxes and thin talent pool. Would he say there was a causation? Or mere correlation?
I was a mite critical of the state. Almost impolite to the University of Maryland employee.
Dr. Lamone’s patient answer surprised me. He didn’t disagree: high taxes drove some talent and business south to Virginia. That was 10 years ago.
George Will
courtesy Jack YoestMaryland’s anti-business practices continue today. George Will, Ph.D., writes, Shoplifting as Governance: Maryland’s Lawmakers’ Unethical Grab at Wal*Mart’s Revenue:
Organized labor, having mightily tried and miserably failed to unionize even one of Wal*Mart’s 3,250 stores, has turned to organizing state legislators. Maryland was a natural place to begin because it has lopsided Democratic majorities in both houses of its legislature.
Even the Washington Post, no friend of capitalism reports on the Wal*Mart tax as:
a legislative mugging masquerading as an act of benevolent social engineering.
Maryland: Hight Taxes; Scarce Talent.
And the employables are fleeing faster. Tom McMahon cites an unimpeachable source as proof people are deserting Maryland: United Van Lines. The nation’s largest household goods mover.
The moving company published a nifty chart showing where people are moving from. And where they are moving to:
United Van Lines Releases 2005 Migration Study
The statistics are among the findings of United’s 29th annual “migration” study that tracks where its customers … moved from and the most popular destinations.
And most important:
Maryland … continued its 13-year outbound tradition [of people moving out].
An outbound tradition? These guys at United Van Lines are funny.
Anyway, it looks like the tradition will continue. Rumors are that Wal*Mart’s proposed new Maryand distribution center with its 800 jobs will move to a business friendly state.
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Thank you (foot)notes:
Dr. Rudolph Lamone won National Entrepreneur-of-the-Year Award (Baltimore) in 1996. He currently serves as Professor Emeritus of Management Science at the Robert H. Smith School of Business at the University of Maryland.
George Will studied at Trinity College in Hartford, and Oxford and Princeton universities. He taught political philosophy at Michigan State University and won the Pulitzer Prize in 1976.
He is the only reason to watch This Week on ABC.
The Will citation appeared in the Washington Post on 19 Jan 2006.
BusinessPundit has thoughts and links.
Below the Beltway has analysis.
The J-Walk Blog pointed the way for Tom McMahon. Tom’s post tells the tax story even better. Go visit Americans Are Leaving The Blue States. Maryland being a blue state, of course.
Unpaid Endorsement: If your are moving, contact Ellen Christian, Manager of Business Development & Marketing with Suddath Relocation Systems, an agent for United Van Lines. Call her at 1.800.766.6116
Maneuver Marketing tells us that Wal*Mart has bigger problems. Visit ASYMMETRICAL CONFLICTS:
It used to be enough to take the high road and hope the problem would eventually go away. But with the advent of … the willingness of special interest groups to engage in increasingly hostile tactics, a new set of rules are called for. Traditional PR doctrine is woefully unprepared to fight these battles.
Jeff Cornwall has tax friendly states.
I came to Maryland because Uncle Sam sent me here. As a soldier one of the first things I was greeted with was the fact that I had to pay sales tax on my Suburban for a second time, both in the state I bought it in, Missouri, and in the state of Maryland. When I mentioned the inequity of being taxed twice to the DMV employee, she responded by saying “why would you want to register a vehicle in Maryland?” Welcome to Maryland! There are some really good things about the state, but I have to agree with you, the tax laws are not one of them.
Jack:
Great web site. I stumbled upon it while reading up on Maryland’s recent Wal-Mart debacle.
The United Van Line study was facinating. I compared the United map with a
map of the 2004 Presidential Election.
All the High Inbound states voted for Bush, except for Oregon and DC.
All the High Outbound states voted for Kerry, except Indiana.
Tells you something.
Bob Arias
Bob, excellent analysis and observation.
Your take on the study deserves a wide audience; Maryland should note your note.
Best,
Jack
Carnival of the Capitalists #121
Welcome to the 121st edition of Carnival of the Capitalists! We here are known as PHOSITA (pho – see – tah) : an arcane bit of patentese that refers to the mythical person of ordinary art. If an invention is…
I understood that two other Maryland companies, one being Northrup Gruman, were among the others that are being hit with this socialist law. Initially, am I correct in understanding that the first version (mid-2005) of the the “Wal Mart Bashing Law” required all companies with 15, 000 employees to anti-up or pay?
I would hope that Wal Mart would just drop their work force to 9,999 rather than pay as their response to this unfair “ganging-up”. It would be poetic justice for the Maryland legislature; what would they now do with the potential of over 7,000 more workers on unemployment overnight? It would be a resounding backfire! AND…I would STILL shop there as I did EVEN AFTER the huge year long media portrayal of Wal Mart as an enemy of the common folk.
So you believe that the people of Maryland should continue to pick up the costs of providing healthcare for Wal-Mart’s workforce? Wal-Mart and other companies are actively engaged in cost shifting (i.e., privatizing profits while socializing costs). The worse offenders are those in the construction industry that employ illegal aliens (visit just about any emergency room in Maryland and see, first hand, how many non-English-speaking Hispanics are using them for routine medical care). If it were not for Maryland taxpayers, many local hospitals would have to shutter their doors. Maryland taxpayers should not have to subsidize multi-national corporations.
Your comment about Northrup-Grumman is non sequitur (some would call it a straw man argument). I worked as a computer scientist/software engineer at Westinghouse Defense when I was younger, and my father worked as an electronics technician at company for almost forty years. I still have friends who made the transition from being Westinghouse to Northrop-Grumman employees; hence, I know from first hand experience, that Northrup-Grumman already spends more than eight percent of their payroll costs providing healthcare to their employees.
As to the high cost of doing business in Maryland: the cost of living is significantly lower in Maryland than it is in Virginia, and we do not tax our residents on their personal property every year. If the poster above believes that being taxed one time for his vehicle in Maryland is horrendous, he should move to Virginia and be taxed on it every year.
As to the scarcity of talent: if you could not find software engineers, it probably had more to do with not paying adequate wages than it did with having a thin talent pool (Maryland has one the top computer science programs in the nation). You are the same kind of employer that screams that there is talent shortage when in fact there is only shortage of talent at the price you wish to pay (I have seen the same tired argument from people who want to justify the importation of low cost labor from India on H-1B visas). From my personal experience, it was not hard to recruit talent in Maryland in 1995.
Finally, if you believe that I am some kind of liberal zealot, you are dead wrong! I left the GOP because it is actively engaged in tax shifting. By reducing the tax on most long-term investments to fifteen percent or less, it has shifted the cost of operating an even more bloated government from capital to work. If we couple this shift in taxation with the fact that FICA has become basically a backdoor income tax (due to the commingling of FICA receipts with general revenues to offset the deficit), we see that those who have to work for a living are being taxed to death by a power hungry, maintain control at costs administration.