What it Means To IT Providers

Of course, the tax will most deeply affect the computer services industry. Many customers simply will not be willing - or able - to absorb a 6 percent tax and will seek price concessions or consume fewer services. To bypass the tax, large customers may stop issuing contracts for certain computer services and instead perform the work in-house. Customers with locations in multiple states will avoid the tax entirely by having their non-Maryland offices hire non-Maryland vendors. These actions will decrease demand for in-state computer services providers and send higher-paying technology jobs to neighboring states, or even other countries.

Some computer service firms follow business models that allow a profit of only 7 percent of revenue. Other companies - including those having a bad year or investing heavily in their future - sometimes earn a profit of less than 5 percent of revenue or even take a loss. Add a 6 percent tax on revenue, and these companies may have no choice but to leave Maryland or cease operations entirely.