Report: Maryland’s Path to Economic Recovery How to Solve Budget Deficits Through Growth, Not Higher Taxes
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The Crisis: Maryland is Falling Behind Economic and Budget Reality: Since the end of 2016, Maryland’s economy has significantly trailed the U.S. and neighboring states on key growth indicators: • • • •
GDP growth: Maryland 1.6% vs. U.S. 13.9%, Virginia 11.2%, Pennsylvania 6.6% Employment growth: Maryland 1.0% vs. U.S. 7.4%, Virginia 5.3%, Pennsylvania 1.0% Personal income per capita growth: Maryland 1.2% vs. U.S. 9.5%, Virginia 6.4%, Pennsylvania 5.6% Real wages average growth: Maryland 4.3% vs. U.S. 7.4%, Virginia 6.5%, Pennsylvania 5.6%
The federal government, including agencies, military installations and research centers, account for 5.7% of Maryland’s employment, compared to just 1.9% nationally. This stagnant economic performance contributed to a $3 billion deficit in FY 2026, expected to grow to $6 billion by 2031.
Economic Performance vs. National Average: • • • • • • •
46th worst tax competitiveness nationally (Tax Foundation, 2025) 4th most expensive state for doing business (CNBC Top States for Business, 2025) Business climate ranking dropped from 22nd to 32nd in two years (CNBC, 2025) Only 12% of business applications become employer businesses — down 7 points in one year Job creation efficiency ranks 35th nationally More than 120,000 residents left Maryland from 2020–2024 (Census, 2024) Corporate tax rate is 8.25%, 9th highest in the nation
Opportunity Cost: 120,325 unfilled job openings as of December 2024, limiting growth
Proven Solution: Four States Turned Deficits into Surpluses Research Findings: Case studies reveal strategic economic growth policies successfully reversed fiscal challenges.
Success Stories: • • • •
Michigan: $2.2B deficit in 2020 → $9.2B surplus in 2023 (3 years) Tennessee: $6.9B debt in 2020 → $1.5B surplus in 2023 (3 years) South Carolina: $71.1B debt in 2012 → $1.8B surplus projected in 2024 (12 years) Utah: $313M deficit in 2011 → $1.5B surplus in 2021 (10 years)
Their Strategy: Competitive taxes + workforce development + targeted industry focus
Report: Maryland’s Path to Economic Recovery Maryland Chamber of Commerce Towson University Regional Economic Studies Institute (RESI)
Maryland’s 3-Part Growth Strategy 1. Corporate Tax Competitiveness •
National Bureau of Economic Research: A 1% corporate tax cut correlates with a 3–4% increase in business establishments over 10 years
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Benefits distribution: 35% to workers, 40% to business owners, 25% to landowners
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Maryland’s Challenges: 8.25% corporate rate, 46th in tax competitiveness, unique tech/digital ad taxes, and unpredictable tax policy
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The Fix: Reduce corporate tax rate to competitive levels, eliminate unique tax burdens, and provide tax policy predictability
2. Fill Jobs & Build Workforce Pipeline •
Opportunity: 120,325 unfilled jobs (55% in Healthcare, Professional Services, Retail)
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Research: Workforce development attracts investment and revenue growth (Tennessee and South Carolina cases)
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Maryland’s Problem: Employment growth lags, businesses lack access to skilled workers
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The Fix: Expand workforce training, strengthen business-university partnerships, create industry-specific pipelines focusing on Healthcare, Professional Services, and Tech
3. Target High-Value Industries •
Research: Industries vary in fiscal impact per worker; Utah shows success diversifying into Technology and Healthcare
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Maryland’s Problem: Heavy reliance on federal employment; underutilizing quantum computing advantage
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The Fix: Leverage $1B “Capital of Quantum” initiative, expand Life Sciences, Clean Energy, Advanced Manufacturing, and Professional & Technical Services
Economic Impact Analysis Industry Focus
Annual Fiscal Impact
Revenue per Worker
Traditional Industries Fastest-Growing Sectors Quantum & Tech Industries
$150M $178M $199M
$15,000 $17,788 $19,935
Report: Maryland’s Path to Economic Recovery Maryland Chamber of Commerce Towson University Regional Economic Studies Institute (RESI)
The Bottom Line: Growth Pays for Itself • • •
Cut corporate taxes to attract businesses (3–4% establishment increase per 1% cut) Fill 120,000+ job openings to boost revenue immediately Focus on high-value industries generating up to $20K per worker in fiscal impact
Expected Result: Budget deficits become surpluses through an expanded tax base Timeline: Case studies show fiscal turnarounds achieved in 3–10 years
Immediate Actions Needed 1. 2. 3. 4.
Enact corporate tax reduction legislation Expand workforce training for target industries Leverage the quantum initiative for economic development Commit to clear, predictable tax policy
Source: Evaluating the Impact of Corporate Tax Policy on State Economies, RESI, Towson University, 2025 Maryland 2023 State of the Economy, Maryland Comptroller Note on Business Formation: While this study focuses on tax competitiveness, workforce development, and industry targeting, improving the rate at which business applications convert into actual employer businesses would also be a critical part of Maryland’s economic recovery. Supporting startups through to sustainable growth can strengthen job creation and broaden the tax base.
Report: Maryland’s Path to Economic Recovery Maryland Chamber of Commerce Towson University Regional Economic Studies Institute (RESI)