Del. McMillan’s comments on his opposition to the Amazon Bill

| April 4, 2018
Rams Head

Del. Herb McMillan

You know, we all have the right to remain silent. Unfortunately, I just don’t have the ability. Especially now. Especially when Maryland is about to give one of the largest corporations in America-a corporation that just got a 14% corporate tax cut in December, and made a profit of $2 billion last quarter -a $6.5 billion corporate welfare check.

A $6.5 billion corporate welfare check, paid out over 25 years. A $6.5 billion corporate welfare check paid over a generation, with the sweat and labor of Maryland’s small businesses and middle class families. Because after all, there is no free lunch; and someone’s tax dollars are going to have to cover the $6.5 billion unfunded mandate this bill creates.

Yes, to our small businesses and working families, $6.5 billion is a lot of money; but to Amazon? It’s not even a year’s worth of profits. The notion that they will move to Maryland for what, to them, amounts to breadcrumbs, scattered over 25 years, is absurd.

What would bring Amazon here? Well, Amazon has said, and I quote, “A business friendly environment and tax structure will be high priority considerations.” Uh oh. That’s a problem. Currently, Maryland’s corporate tax rate is 8.25%, the 11th highest in the America. The Tax Foundation ranks our business climate 43rd, and CNBC ranks Maryland 48th on the cost of doing business. It’s no surprise that Maryland has to rely on million and billion dollar subsidies to attract and retain big employers. Maryland’s business climate is best summed up by Ronald Reagan: If it moves, tax it. If it’s still moving, regulate it; and when it stops moving, subsidize it. Maybe that’s why Maryland’s given Marriott $62 million, and Northrop Grumman $37.5 million in subsidies to, “keep them here,” within the last two years. Does anyone see a pattern here? Maybe it’s time to do some much needed surgery on Maryland’s high taxes and business regulations. This $6.5 billion corporate welfare pill, this big subsidy, will only treat the symptoms, not the problem; and it’s only good for one patient. Imagine if, instead of spending $6.5 billion on Amazon, we distributed it to companies already here, in the form of a tax cut. Why not do that? Clearly, if you vote for this one multi-billion dollar corporate subsidy, you don’t have a problem with “trickle-down” economics—because you obviously believe in “pour it on one company” economics. We could cut Maryland’s corporate taxes in half over the next decade, and spend the same amount of money. That’s the kind of upgrade to Maryland’s overall business climate and tax structure that would be good for all large and small corporations that want to grow and increase jobs, including businesses that are already in Maryland. We don’t need bigger subsidies for three corporations; we need better policies for all of our businesses; and if we had them, we wouldn’t be having this debate right now.

But Maryland doesn’t have good tax and business policies, and so we are having this debate. So let’s review this “deal” from the perspective of the Maryland taxpayer.

In December, Congress lowered the corporate tax rate from 35% to 21%. Without question, corporations received better treatment than small businesses and people. In Maryland, as a result of these federal tax changes, 23% of Marylanders will see their state taxes increase; and the administration and this legislature is doing nothing to change that. Of the $550 million in higher taxes Marylanders will pay, only $100 million will be given back; and probably not to the people it was taken from. Because of the failure of the Governor and legislature to keep their commitment to make these Marylanders whole, county piggyback taxes will also go up $250 million. When you kick in the $350 million in new health care taxes, the administration and the legislature will have raised taxes on our small businesses and people by over a billion dollars.

But–NOT on Amazon. They won’t pay Maryland taxes for decades; and the way this deal is crafted, our taxpayers will actually be sending them a check every year for decades. Maybe we should change those signs on our border from, “Maryland is open for business,” to “Maryland is open for A Business.” There is a difference; and our small businesses and working families get it. They aren’t stupid.

Small business owners are told this is a good deal for them. They must be scratching their heads. This year they’ll deal with a minimum wage increase, higher health insurance premiums, and a paid sick leave policy that no one understands. They will pay income, property, and sales taxes, and so will their employees. Meanwhile, we’re talking about giving Amazon, the corporation that made a $2 billion net profit last quarter, a $6.5 billion corporate welfare check that these small businesses and families will pay for over a generation. They’re dealing with the reality of Maryland taxes and regulations, to finance the Amazon fantasy. Amazon is getting the goldmine, and they’re getting the shaft.

Proponents of this “deal” say we must do it to “create jobs.” But is the juice worth the squeeze? Maryland’s unemployment rate is 4.5%, the same as the national average. Maryland currently has 3.1 million people employed. If Amazon moved to Maryland, it would increase our job base by just 1.6%, at a cost of $6.5 billion. Moreover, the unemployment rate in Montgomery County is 3.3%, and they have the 11th highest median income in the entire United States. Now, I’m happy for Montgomery County; but they need economic stimulus like a fish needs a bicycle. Of course, we are told that this “package” will have a “ripple effect.” But the size of any ripple depends on how far you are from where a stone hits the water. Unfortunately, 10 counties and Baltimore, all of which have unemployment rates higher than the national average, are too far away for much of a ripple; but they’ll still be asked to pay for the stone.

Some of my Montgomery County colleagues who supported the corporate welfare check for Marriott, and opposed the one for Northrop Grumman, tell me they support this $6.5 billion subsidy for Amazon. They say there’s a big difference between keeping jobs here and bringing jobs here. There isn’t, really.

A subsidized corporate job is a subsidized corporate job. But I understand their flip-flopping. In Annapolis, where you sit frequently determines where you stand.

If you do nothing else, read the fiscal note. The Department of Legislative Services states, and I quote, “There is a lack of information on the timing and actual qualifying economic activity associated with this project.” The same fiscal note advises that the Department of Commerce is off by 3.3 billion on the cost of this bill. This bill is an expensive pig in a poke; there is no way for the Department of Legislative Services to quantify the time and amount of our expenditures, or most importantly, our return on investment. We are told the Department of Commerce can’t share much of Amazon’s information with us because it is “proprietary” and they’ve signed a “non-disclosure agreement” with Amazon. One thing is certain; we already know the Department low balled the costs by $3.3 billion.

This is ridiculous. We’re going to give away $6.5 billion dollars to a company that won’t give us the information the Department of Legislative Services needs to analyze this deal. And we’re supposed to trust a Commerce Department that’s already made a $3.3 billion dollar error on its cost to monitor it.

Trust, but verify. That’s our job. Make no mistake. This vote will determine whether you are a fiscal watchdog, or a fiscal lapdog. You cannot be both.

We were told earlier this week that it was too complex during this session to give Marylanders back the $550 million in state tax increases they will pay as a result of federal tax law changes. Those “complexities” pale in comparison to the complexities and scope of this $6.5 billion tax cut for one, just one, corporation. Clearly, that corporation, not the people of this state, have become the focus of this administration and this legislature.

Mr. Speaker, you cannot be for big government, big taxes, and big corporations, and still be for the little guy.

I urge you to stand up for the forgotten middle class, and for all the little guys tired of carrying the big burdens Maryland’s policies have placed on them. Their taxes are high enough—they shouldn’t have to pay Amazon’s too.

–Del. Herb McMillan

EDITOR’S NOTE:  The bill passed 79-59

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