4.30.25 – Maryland Matters – David Tohn
As CEO of BTS Software Solutions, a Maryland-based defense and intelligence technology firm, I frequently visit America’s leading defense tech hubs. Surprisingly, the most dynamic ecosystems aren’t always in Maryland or Northern Virginia but in fast-growing cities like Augusta, Georgia, and San Antonio and Austin, Texas.
In visiting these places, it is with an eye toward bringing best practices back to Maryland to accelerate our growth in a competitive national and international environment.
These cities not only have thriving commercial tech economies, but also host major federal technology centers. Augusta is home to the National Security Agency and the U.S. Army Cyber Command Center of Excellence. Austin houses the Army Futures Command headquarters and attracts artificial intelligence, robotics and cybersecurity firms. San Antonio, also an NSA hub, now boasts over 1,000 tech companies, including industry giants like Microsoft and Accenture.
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It’s no coincidence that Texas ranks as the third-best business climate in the U.S., Georgia ranks fourth, and Maryland lags at 31st.
What sets these states apart is their commitment to policies that help technology firms grow. That’s why it’s alarming to see Maryland take the opposite approach by enacting a 3% sales tax on information technology and related services—the so-called Tech Tax.
While businesses understand the need for a balanced state budget, this tax directly undermines Maryland’s stated goal of leveraging our true strategic advantage – a world-class concentration of technology and cybersecurity firms. Maryland is home to over 3,300 federal contracting firms, with many ranging from traditional IT services to some of the most cutting-edge technologies in the world. Most operate as subcontractors to large businesses with prime contracts to the federal government. Because they provide services through another business, they will be directly impacted by the Tech Tax.
In a federal market where a 10% margin is considered strong, an additional 3% tax makes Maryland subcontractors less competitive, reducing their ability to reinvest, grow, and hire. This tax will not only stifle job creation but also drive firms to more business-friendly states.
Maryland’s technology companies don’t operate in isolation. They have options, and with the Tech Tax now law, recruiters from lower-cost, high-growth states will have an enticing pitch. Meanwhile, federal agencies, under increasing budget scrutiny, will look for lower-cost alternatives — putting Maryland firms at a clear disadvantage.
Over time, if Maryland firms consistently lose contracts due to higher costs, many will relocate to more dynamic states where business conditions are more favorable. This would be a devastating blow to our state’s economic future.
Gov. Wes Moore has rightly called Maryland’s technology sector a “lighthouse industry” that will guide our state’s economy forward. Yet, the Tech Tax threatens to extinguish that light, forcing federal subcontractors to move operations elsewhere.
As a longtime Marylander, I urge policymakers to reconsider the long-term consequences of these decisions. A tax that undermines our technology industry will hinder Maryland’s economic growth and cedes our competitive advantage to other states.
Let’s keep Maryland a leader in technology, not drive innovation and jobs away.
David Tohn is CEO of BTS Software Solutions, a service-disabled, veteran-owned small business headquartered in Columbia. MORE FROM AUTHOR