January 29, 2021
For almost 15 years my wife Amy and I have been building our business, Zeke’s Coffee. We started in our garage and our daughter decorated our coffee bags with her collection of ink stamps at the Baltimore Farmers Market.
The work was worth it. Today we employ more than two dozen people, and our coffee is sold throughout the Mid-Atlantic and beyond to New York and Pittsburgh.
Along the way, we prided ourselves on giving back to the community – supporting countless local fundraisers or donating coffee to pantries. I also give back to the community by paying taxes on our business income.
Nobody likes to pay taxes, but I appreciate the need to provide the things that strengthen our communities. We know that by paying taxes we are contributing to a better Baltimore and a better state.
But I’ve learned that our state tax system is stacked against small businesses like mine. We are required to pay corporate taxes, but many large corporations from multiple states have found loopholes that allow them to avoid paying corporate taxes in Maryland.
I was shocked to learn that about a third of the 150 largest Maryland corporations in any given year don’t pay state taxes despite making big profits in our state and using the public services we all work for.
This is incredibly frustrating for me, and certainly for many other small business owners who faithfully pay taxes to support schools, roads, healthcare, and other government priorities. Businesses that profit from selling a cup of coffee should pay an equal portion of corporate tax on those profits if they are a local coffee shop like mine or Starbucks. But that’s not how Maryland’s tax law works right now.
A law is pending in the General Assembly to close these loopholes. Multi-state corporations would have had to practice combined tax reporting, which means they would have to take into account the profits made in Maryland and pay corporation tax on them. Ask any small business owner if these loopholes are fair, and the answer is a loud no.
We know we have to pay income tax; We just want the state to treat all companies equally, whether they make $ 10 billion a year or $ 10,000 in profit.
Beyond fairness, our state needs to have the resources we need to support those dealing with the COVID-19 outbreak – both individuals and companies that have had problems in the past 10 months. And we have many unmet needs across the state, be it to upgrade our schools, rejuvenate struggling communities, or improve our public transportation.
All of this costs money.
We should ask big companies to pay their fair share of taxes to generate additional resources. According to legislative analysts, closing these business loopholes would add more than $ 300 million to our state budget each year. If you do, you will make a world of difference to Maryland’s small businesses like ours.
– THOMAS RHODES
The author is the President of Zeke’s Coffee, based in Baltimore.
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