HUNT VALLEY, Md. — Maryland-based spice giant McCormick & Company, a cornerstone of the state’s culinary heritage for over 140 years, is sounding the alarm over a proposed 2.5% business-to-business (B2B) sales tax, warning it could jeopardize its century-long presence.
The tax, aimed at addressing a $3 billion state budget deficit, would impose a charge on professional services—such as accounting, marketing, tax preparation, consulting, information technology, landscaping, photography, truck repair, and valet parking—currently exempt from Maryland’s 6% sales tax. With approximately 1,000 employees at its Hunt Valley headquarters and 14,000 globally, McCormick’s potential exit has sparked intense debate.
Paul Nolan, McCormick’s vice president of tax, government affairs, and strategic real estate, led company representatives in opposing the tax at packed public hearings in Annapolis on Wednesday, March 12. “This is the wrong tax at the wrong time,” they argued, highlighting that the added costs—estimated to “roll through” and be “very substantial”—could force the relocation of operations not tied to its physical plant. Nolan noted that the tax could influence “planning decisions about where to locate certain functions,” suggesting a strategic reassessment of McCormick’s Maryland footprint, known for iconic products like Old Bay crab seasoning, a Maryland cultural staple.
Economist Anirban Basu echoed these concerns, warning of broader economic fallout. He predicted that the tax could shrink businesses, drive expansion elsewhere, and trigger an exodus, with McCormick’s potential move risking hundreds of jobs. “If McCormick is thinking that way, you know other companies are thinking that too,” Basu said, criticizing Maryland’s regulatory and tax environment as “our own worst enemy” with “too much regulation and far too high tax rates.” This sentiment aligns with business leaders’ fears that the tax could erode Maryland’s competitiveness, especially when neighboring states like Delaware (no sales tax) and Virginia (5.3% sales tax) offer lower burdens.
The proposal, part of legislative efforts to close a deficit exacerbated by federal budget cuts and economic shifts, has drawn bipartisan scrutiny. Governor Wes Moore’s administration has pushed tax reforms, including income tax overhauls and a 75-cent delivery tax, but the B2B tax—projected to raise $1 billion—has emerged as a contentious alternative.
Critics, including McCormick, argue it penalizes businesses at a time of economic uncertainty, potentially driving firms to relocate within an hour of state borders. The company’s threat to leave, while not immediate, underscores a growing narrative of Maryland losing ground to more business-friendly states, a concern amplified by posts on X reflecting public frustration with tax hikes.
However, the establishment narrative framing this as a deficit solution overlooks critical gaps. The tax’s impact on small businesses, which rely heavily on outsourced services, remains underexplored, and McCormick’s vague “certain functions” leaves ambiguity about the scale of relocation—could it be administrative roles or entire divisions?
Maryland’s 46th ranking on the Tax Foundation’s State Business Tax Climate Index and third-highest business costs (per CNBC 2024) lend credence to relocation risks, yet the state’s $67 billion budget and 48,000 public sector jobs suggest a reliance on revenue that may justify the tax to some lawmakers.
