Posted on 04/22/25
| News Source: FOX45
Baltimore, MD - April 22, 2025 - A growing number of tech companies are packing up and preparing to leave Maryland if Governor Wes Moore signs off on a controversial new IT tax. It's a move they say will punish innovation and crush their margins.
“We're kind of red state curious,” said Todd Marks, CEO and founder of Baltimore Based Mindgrub Technologies. “Tennessee, North Carolina, Florida. We're actually looking at Wyoming, which has zero corporate tax.”
After more than two decades of making and marketing software here in Maryland, Marks is considering a move he never planned on making.
“We've got one foot out the door in the state, but you know, we would gladly just stay here,” he said.
Pushing him out, a pending 3% sales tax on IT and data services, set to take effect July 1. Lawmakers fast-tracked the tax towards the end of session, giving little time for tech companies to prepare or weigh in.
“It’s almost a third of your bottom line. So, it's super impactful and you can’t just readily roll it over your clients and make them pay, because why would they pay more if they could just hire a company in Pennsylvania or Virginia and not pay 3%,” Marks argued.
Wade Berger, owner and CEO of Ascendant Innovations, a federal contracting firm in Hanover, echoed Marks' concerns.
“I've been here 30 years. I've raised children here. I want to stay here,” Berger said. “It's actually a 624% increase in the tax burden from Maryland just on my company. That's not something that any of us saw coming. It's not something any of us can budget for.”
Both Marks and Berger said they’d lose about $250,000 in additional taxes annually, while the state expects to make about $500 million in new revenue.
“That in itself pretty much puts a lot of the small companies like mine in jeopardy,” Berger said.
“We're shrinking as a state and you need to grow. To grow, you have to, you know, the expression is money goes where it's welcome, right? And we don't welcome money here. We push it out of state,” Marks said.
The future of the tax - and potentially Maryland’s tech industry - now sits on the governor’s desk waiting to be signed into law.
“It's not too late to fix this,” Marks said.
Marks noted Brian Crosby, one of just two Democratic lawmakers to vote against the tax, has already moved his company to Virginia, claiming the tax would “cripple his business.”
“When companies can leave, the last thing you want to do is tax them more because they will leave,” Marks warned.
In response to questions from FOX45, Governor Moore's office provided a statement, which reads:
When the governor signs this budget 94% of Marylanders will either get a tax cut or see no change in their income taxes. This proposal passed by the general assembly includes at least an additional $500 million in targeted cuts – on top of the cuts the administration has already proposed. Governor Moore has long stated that in order to grow Maryland’s economy we must invest in industries of the future—it’s why he’s proudly announced public-private partnership that will catalyze $1 billion in investments quantum information science and technology; a $1.8 million award to to bolster Maryland’s cybersecurity training at every Maryland community college; and signed an executive order to accelerate the replacement of outdated technology systems in the state government, orders development of a statewide modernization plan that inventories old systems and prioritizes systems and applications for upgrade. The governor will continue to work with the State Legislature, local leaders, and all partners involved to ensure that we pass a budget that will give middle class families a break, grow our economy, and protect and invest in our people.