Friday Five | July 28, 2023

A recap of this week’s top-five news items and resources from the intersection of business and government.

1. Maryland’s digital tax is a cautionary tale, not a blueprint

States mimicking Maryland’s first-in-the-nation digital advertising tax may be tempted to celebrate the Maryland Supreme Court reversing a lower court’s ruling by throwing the tax out, but the reality is while Maryland won a short reprieve on the basis of legal technicalities, those thinking this ruling gives a green light to tax digital advertising are in for a rude awakening. The lame duck tax, that is almost certainly legally doomed, sets the state up as blatantly business-unfriendly, and should not suggest to others can copy without consequence.

Where the law stands and why it matters: The recent ruling by the Maryland Supreme Court did not address the substantive arguments or the constitutionality of the case, but instead sent the case back to Circuit Court to vacate the decision, stating that the plaintiffs failed to exhaust their administrative remedies. This first-in-the-nation tax on digital advertising is yet another onerous cost of doing business in Maryland.

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2. As employers expand AI in hiring, Maryland is one of few states that have rules

Artificial intelligence has been adopted by a quarter of businesses in the United States, according to the 2022 IBM Global AI Adoption Index. Many are beginning to use it in the hiring process. State laws have been poor at keeping up. Only Illinois, Maryland and New York City require employers to ask for consent first if using AI during certain parts of the hiring process. A handful of states are considering similar legislation.

A solution? One way to avoid issues with AI in the hiring process is to maintain human involvement, from product design to regular monitoring of automated decisions. In situations where machine learning or data collection is used free of human input, the machine is at risk of being biased toward certain groups.

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3. Updated criteria for new FBI headquarters announced, boosting Maryland’s locations

The General Services Administration announced changes in criteria for choosing a location for a new FBI headquarters earlier this month, boosting two potential places in Maryland which have been competing with Virginia for the bureau’s new home. The new criteria gives more weight to cost and social equity concerns than it does to proximity to the FBI Academy in Quantico, Va. The administration anticipates making a site selection in the coming months.

The benefits? A new FBI headquarters in Maryland will bring jobs and opportunity to the state’s workforce. Maryland’s proposed sites are build-ready and offer easy access to transit, saving taxpayers an estimated $250 to $500 million.

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4. Hahn Bros. plans expansion in Carroll County

Westminster-based meat production company Hahn Bros. said Monday it will relocate to Hampstead as part of an expansion that will see an increase in its workforce and production capacity. The company is buying 10 acres of land in Carroll County to build a 54,000-square-foot production facility north of the company’s current facility. The company has 85 workers and hopes to double its workforce as it expands its facilities over the next five years.

Local impact: Hahn demonstrates the success and potential of homegrown business in Maryland. The company’s decision to expand within Carroll County and invest in the local workforce there is praiseworthy.

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5. Consumers feel better, but not great, about economy

In July, consumer sentiment rose and hit its highest level since September 2021. The lessening of inflation and the continued strength of the job market are behind this increase. However, overall sentiment remains low. Usually, when consumers sour on the economy, they cut back on spending. This has traditionally made consumer sentiment a key gauge in tracking the economy — but that may no longer be the case.

Past, present and future: The disconnect between sentiment and actual spending behavior makes it difficult to predict consumer behavior, but data points towards possibly higher consumer spending and sales that could benefit businesses.

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