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Maryland’s Hidden Potential: Why World-Class Assets Aren’t Translating to Economic Leadership

Aug 28, 2025

Maryland is grappling with a significant budget deficit that recent tax increases and spending cuts during the 2025 legislative session have only partially addressed. Despite these measures, economic growth continues to lag behind peer states. The state is outspending its revenues, with a projected deficit growing from $3 billion in 2026 to $6 billion by 2031. Without a shift in strategy, Maryland’s economic strength will remain untapped — and more budget shortfalls are expected.

At the same time, Maryland has all the essential ingredients for economic success — top talent, innovation, leading research institutions, and a strategic location near the nation’s capital. So why isn’t this translating into stronger growth and fiscal stability?

The Challenge: Policy and Cost Are Holding Us Back

Businesses struggle to start, grow and stay here because policy decisions increase costs and discourage investment. The data reveals a troubling story:

Maryland ranks 32nd overall in business climate, down 10 spots in two years (CNBC, 2025)

The state is 46th in tax competitiveness — with an 8.25% corporate tax rate, the 9th highest in the nation (Tax Foundation, 2025)

Maryland is the 4th most expensive state for doing business (CNBC, 2025)

Only 12% of business applications become employer businesses — down 7 points in one year

Job creation efficiency has dropped drastically — Maryland ranks 35th nationally

More than 120,000 residents left Maryland from 2020-2024, ranking us 44th for domestic migration

Additional Challenge: Federal Workforce Impact

Maryland currently leads the nation in federal job losses. This sharp decline highlights the urgent need to diversify our economy by fostering a business-friendly climate that supports existing companies and attracts new employers and talent — both essential for long-term growth and fiscal stability.

Why This Matters to All Marylanders

This isn’t just about rankings or policy debates. Maryland’s economic performance directly impacts:

Workers and families who benefit from better job opportunities and higher wages
Young professionals deciding where to build their careers
Parents concerned about good jobs for their children
Community leaders relying on thriving local businesses for strong neighborhoods, schools, and services
Small business owners competing amid some of the nation’s highest business costs

Research-Backed Solutions: The Path Forward Without Raising Taxes or Deep Cuts

We partnered with Towson University’s Regional Economic Studies Institute (RESI) to uncover strategies that work:

Corporate Tax Reduction: A modest 1% cut in the corporate tax rate can boost business establishments by 3–4%.. This growth benefits workers too — 35% of gains translate into higher wages and better job opportunities.

Job Growth as Fiscal Strategy: Temporary budget fixes won’t solve Maryland’s structural deficit. Instead, supporting sustainable job growth in high-value industries is the key to long-term fiscal health.

The Numbers Don’t Lie: Adding 10,000 jobs in Maryland’s “Capital of Quantum” industries could generate $199 million annually — enough to cover a large portion of the deficit without raising taxes.

Maryland Isn’t Alone — Others Have Done It

North Carolina: Corporate tax cuts attracted new headquarters and accelerated growth.
Tennessee: Shifted from $6.9B debt to $1.5B surplus through pro-growth policies.
Michigan: Turned a $2.2B deficit into a $9.2B surplus focusing on competitiveness.
Utah: Went from a $313M deficit to a $1.5B surplus in 10 years with a stable, business-friendly environment.

Maryland’s Choice: Growth or Decline?

We can keep raising costs and watch opportunity leave — or we can adopt smart policies that unleash Maryland’s full potential.

The talent is here.
The research institutions are here.
The strategic location is here.

What’s missing are policies that empower these strengths to drive growth and economic leadership.

Building a Coalition for Maryland’s Future

Unlocking Maryland’s economic potential won’t happen through experts alone. It requires a broad conversation including workers, families, business owners, community leaders, and policymakers.

This isn’t about politics — it’s about creating opportunities for Maryland families and communities to thrive.