How stupid is the state of Maryland? No, not it's fine people, but it's short-sighted governor Marty O'Malley and its state legislature, which recently upped taxes state-wide in an effort to fund new programs and pay for additional government services.

The tax hike has residents steaming and companies rallying to protest the new levies. At the forefront are Maryland's technology companies, which could see the state grab up to six percent of its earnings in taxes.

In fact, the Tech Council of Maryland, Maryland’s largest trade association representing the state’s IT and Biotech industries, is organizing a repeal effort, with a major rally this week in Annapolis. The council is joining with members of the Fight the Tech Tax Coalition at a legislative rally to call for the repeal of the computer services sales tax on February 27, 2008.

Tech Council of Maryland CEO Julie Coons says lawmakers must realize the potentially devastating effect of the computer services sales tax on their jobs and on Maryland’s IT industry.

“The computer services sales tax represents an about-face on the state’s longstanding efforts to attract technology businesses,” says Ms. Coons. “The state has spent years of effort and taxpayer dollars to successfully recruit technology jobs to the state and build incubators for high tech research -- successfully -- only to turn around and create a hostile tax environment. This ‘penny wise,’ approach does not take into account the lost revenue if businesses and high-paying jobs leave the state.”

The Maryland computer services sales tax would apply the state’s 6 percent sales tax to all Maryland businesses providing computer services, as well as out of state companies serving Maryland-based customers. More than 18 bills to reduce or repeal the tax have been introduced in the House of Delegates. Hearings on the matter have been scheduled for March 12.

“The threat is real,” says Ms. Coons. “Already, Pennsylvania and Delaware are courting our members hoping to entice them to move. We have to stop this tax before we lose hundreds, if not thousands, of high-paying jobs that will never return. Its important that all businesses affected by this tax make their voices heard.”

In a tough economic climate, with a tight money supply and falling revenues, why in the name of Walter Mondale would Maryland's government leaders hobble its tech companies with an onerous sales tax?

Because they can, that's why. Here's hoping that the state's tech companies do move out to tax friendlier states like Pennsylvania and Delaware, and takes much-needed jobs with them. Then Maryland's governor and the state legislature would finally realize how democracy really works.