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Corporate Welfare or Taxpayer Warfare?

September 24, 2010

That might be the question on the mind of Montgomery County (MD) Executive Ike Leggett. The reason why is because, earlier this summer, Leggett announced that he would ask the Montgomery County Council to pass a law that would exempt Lockheed Martin, the major defense contractor headquartered in the county seat of Bethesda, from paying the county’s hotel tax. At issue is a facility on the Lockheed corporate campus called the Center for Leadership Excellence, which houses visiting workers, contractors, and vendors. Between December and April last year, the Center housed 9,000 people. Also, the Center has created 175 jobs, according to the county’s budget director.

The State of Maryland has already enacted legislation that would exempt Lockheed’s facility from the state’s hotel tax. As it is designed, Leggett’s bill would exempt only Lockheed’s facility. The exemption would cost the county $450,000 in tax revenues a year, according to opponents. They argue that Lockheed Martin, being a major corporation, can afford to pay the tax. Further, they argue that the county cannot afford to give away tax breaks “when our citizens are suffering from furloughs, layoffs, hiring freezes and drastic cuts in services.”

What strikes me about these arguments is the strange logic behind them. Here we have a situation where a business, which is not in the hotel business at all, is unfairly subject to a tax. Legislators at the state level have recognized this is a problem and have acted to exempt the business and similar facilities from the tax. But none of that matters to opponents of corrective measure because they are so starved for money, especially other people’s money redistributed through the government, that they would unfairly tax an entity – including one that is providing $7.1 billion to the local economy and employing thousands of area residents – to get at that money. I can’t think of a better case for budget and tax reform.


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