Senator Crusading to Close Corporate Loophole Woos Business on Kirwan Plan

Sen. Paul G. Pinsky (D-Prince George's) works on the Senate floor. Photo by Danielle E. Gaines.

In a small gray conference room at the Homewood Suites in Largo, Sen. Paul G. Pinsky (D-Prince George’s) made his pitch recently in support of a $4 billion education reform plan.

His audience: about 20 of his county’s most successful business leaders. His message: some businesses would have to pay more to ensure the proposal’s success.

The Kirwan Commission’s recommendations ― currently under consideration by the General Assembly as the Blueprint for Maryland’s Future ― are meant to lead more students to enroll in career and technical education, expand pre-kindergarten that can send thousands of Marylanders back into the workforce and raise wages for teachers and Maryland high school graduates, he said.

Those potential benefits are something that Pinsky and other advocates think businesspeople can get behind ― even as questions swirl about how to pay for the state and local shares of the increased education spending.

Days before his meeting in Largo, Pinsky was seated at the witness table before the Senate’s Budget and Taxation Committee, defending bills to require combined corporate tax reporting and increase income tax collections for hedge fund managers.

Lawmakers are cobbling together a series of revenue measures this year to dedicate funding for the first four to five years of the reform plan.

A proposed constitutional amendment to allow sports betting is very likely to pass. Top lawmakers maintain that large-scale tax reforms won’t be necessary to support the education reform proposals for at least a few more years. Senate President Bill Ferguson (D-Baltimore City) and House Speaker Adrienne A. Jones (D-Baltimore County) have promised no increase to the state’s income, sales or property taxes this year.

Four legislative committees will vet the reform bill, beginning with a hearing Monday: the House Appropriations and Ways and Means committees, and the Senate’s Budget and Taxation and Education, Health and Environmental Affairs, which Pinsky chairs.

Pinsky mentioned the revenue bills ― several characterized by advocates as “closing corporate loopholes” ― at the meeting with business leaders. “There are probably 15 things on the table. Nothing has been decided yet,” he said. “…And hopefully none of that will affect your companies in a significant way.”

He organized the meeting with Prince George’s business leaders after seeing a letter circulated by 38 heavy hitters in the Baltimore business scene, who expressed support for funding the Kirwan Commission proposals to benefit the state’s economy.

So how does Pinsky reconcile pursuing his bills while also seeking support from the business community for Kirwan?

“I think everybody’s got to pay their fair share,” Pinsky said. “I’ll say it to those people. I’m not going to hide it.”

For years, Pinsky has pressed the combined reporting bill, which has been regularly debated ― and opposed by leading business groups ― in the General Assembly since 2003. But Maryland is now among a minority of states that have not implemented the change, and the measure could generate an extra $172.3 million by the 2022 fiscal year.

“If Maryland-based businesses are paying their corporate income tax, and another company has been able to avoid them through their CPAs and their attorneys, I have no qualms in supporting that, and I’ll justify it to the business community,” Pinsky said. “…I can sleep at night, going after large corporations that are dodging their taxes and at same time saying we have to invest more in education.”

The meeting at the Homewood Suites included a presentation from economist Anirban Basu and a pitch from Ferguson.

For the past two years, Ferguson has been holding meetings with business leaders, who he thinks can be key nontraditional partners in pushing the reform plan.

“We need you,” he told the group in Prince George’s. “This is not just about education. …This is the hard-and-fast reality of our economic prosperity in the state of Maryland moving forward. And you all are the ones that can help make that case if you’re interested in being on the team.”

Ferguson noted that Nike, the largest company in Oregon, recently contributed money to defend a multibillion-dollar tax hike meant to fund public education in that state.

Basu shared the results of a report commissioned by Strong Schools Maryland, which concluded that the extra billions pumped into public education by the state and counties could be recovered by 2046, as a result of a larger tax base and less reliance on social safety net programs.

Basu noted that businesses in Massachusetts rallied behind education reform in that state in the early 1990s. Before the “Massachusetts miracle” education reforms, the commonwealth had a per capita income $250 higher than Maryland’s. Since the reform effort, that gap has widened to more than $8,300, Basu said.

Business groups in Annapolis have pushed back against some of the revenue proposals during bill hearings so far this year. The hearing on the Kirwan plan itself Monday is expected to draw extensive ― and perhaps more nuanced ― testimony.

David Harrington, president and CEO of the Prince George’s Chamber of Commerce, said after the meeting in Largo that he believes education reform is necessary, but “what goes hand-in-hand is improving the business climate.”

“We want to be partners in Kirwan, it makes sense, but let’s also have a conversation about how we create incentives and begin to provide increased opportunity for small businesses in Maryland,” said Harrington, a former state senator. “We have to have, equally, those conversations as well.”

Pinsky estimates that his committee will sift through dozens of possible amendments to the proposed new education policies. If implemented, he thinks the proposals could remake the educational and business landscape of his home county.

“I take the challenge personally of trying to improve our school system,” said Pinsky, who worked for 20 years in Prince George’s County Public Schools and served as a member of the Kirwan Commission. His wife retired from the school system, where his daughters were educated.

“Whether it’s that I drank the Kool-Aid, or that I’ve been a part of the process,” Pinsky said, “I’m a believer.”

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