New tax stirs up threats to move

High-tech offices being wooed by Pa., Del. officials

By Gadi Dechter Sun reporter
February 22, 2008

In January, just as anger over a new tax on computer services was beginning to boil over in Maryland's high-tech sector, Robert Epstein received a call from the Pennsylvania Department of Community and Economic Development.

"This guy called and said, 'I don't know if you've heard of the computer tax coming on board in Maryland. ... Have you ever thought of opening an office in our state or relocating to our state?'" recalled Epstein, president of About-Web LLC, a 52-employee, information technology firm based in Rockville.

After poring over maps last week with Pennsylvania officials courting his and other companies in Maryland, Epstein said he is thinking of moving a large chunk of his business to York, where employees can serve Baltimore-area clients. He's already committed to investing more resources in an office he has in Virginia.

Other technology executives in Maryland tell similar stories of being approached by officials from neighboring states and by commercial real estate brokers looking to capitalize on widespread discontent in the information technology sector over the new tax.

Gov. Martin O'Malley's secretary of economic development, David W. Edgerley, said yesterday that his office is aware that Pennsylvania and Delaware have recently targeted Maryland computer companies. He said he is "monitoring the situation" but does not believe it is widespread.

"It is standard operating procedure behind the scenes to try and take advantage of any opportunity," Edgerley said of states' business development agencies. "I don't think it will be very successful."

But in interviews, executives at Maryland's computer companies said they are more receptive than ever to such advances, and some said they are planning to move at least part of their operations out of state to avoid the recent expansion of the sales tax to the computer services industry. More here.