Maryland Ranks Bad for Business: Even This Left-Leaning Study Can’t Save It

On CNBC’s 2026 Top States for Business list released last week, Maryland ranks #36 overall for best business climate in the nation for business, worse than it ranked last year at #32 (1st=best for business; 50th=worst). The study evaluates all 50 states using 138 metrics across 10 categories of competitiveness.

Maryland has long struggled in similar business climate rankings (many of which CNBC incorporated into its scoring for this year). For example, on the Tax Foundation’s State Tax Competitiveness Index, Maryland ranked #46 in FY26. And on Cato Institute’s 2023 Freedom in the 50 States index, Maryland ranked #47 regarding regulatory freedom and #35 regarding fiscal freedom.

What stands out about the CNBC study is that its scoring leans "left" in several categories. Even with this progressive scoring boost, Maryland still stands at a mediocre overall (#36). Maryland avoids the bottom 10 ranking thanks primarily to "Quality of Life," "Technology and Innovation," "Education," and "Infrastructure" – categories with some of the heaviest weighting for progressive and market-interventionist policies.

For example, the Quality of Life category rewards states with more federal research funding, “livable wage” laws, union and collective bargaining protections, and even pro-abortion policies.

Maryland’s weak #36 overall ranking stems primarily from its dismal #49 ranking in the study’s "Economy" category – calling Maryland out for having one of the worst economies in the nation. In the "Economy" category, Maryland fell behind West Virginia (#48) and beat only Rhode Island (#50).

This near-last ranking on "Economy" (#49) is because Maryland scored poorly on factors like GDP growth, job growth, and overall budget picture including spending, revenues, and reserves. The "Economy" category also includes factors like the number of major corporations headquartered in each state and health of the residential real estate market. Maryland also ranks poorly on the "Cost of Doing Business" category at #44, which includes things like tax climate and related costs.

Most nearby states rank better overall: Virginia (#3), Pennsylvania (#13), and Delaware (#32). So, it’s no surprise that Marylanders are voting with their feet – a problem I wrote about here.

The General Assembly and Governor Moore need to get serious about improving Maryland's ability to attract and grow businesses. They must remember that at the end of the day, it’s everyday residents – Maryland's consumers – who benefit from a stronger economy and lower costs of doing business.

FCC Allows Broadband to Substitute Router Parts Amid AI-Driven Shortages

On June 9, the FCC granted a partial waiver of its March ban on certain routers. The situation is bureaucratic and messy. While the March order banned “all consumer-grade routers produced in foreign countries” on national security grounds, the June waiver does not lift that ban.

Instead, the waiver allows already-approved domestic routers (approved by the FCC before March) to have certain parts substituted – substrate material and memory – without triggering a full re-certification process. In effect, the FCC is treating these modified designs as the same product, avoiding the need for them to go through a new approval process all over again.

This waiver was in direct response to the NCTA – the Internet & Television Association, which petitioned the FCC on June 2 explaining why it’s so important that their members be allowed to substitute components in their router designs: “unavoidable supply chain shortages in critical substrate material and memory . . . significantly constrain the industry.” The original ban in March had threatened to sharply limit new router imports and sales until approvals or waivers could be secured since the vast majority of waivers are made abroad.

In fact, the substrate and memory shortages are so severe that it would’ve been difficult for the FCC to find a worse time to ban consumer-grade foreign routers. The shortages are hitting broadband operators like NCTA members hard as increasing demand for capacity, driven by the current boom of artificial intelligence, is affecting their ability to serve their customers. Surging demand for AI GPUs has drawn massive production capacity toward high-end AI chips, tightening supplies of traditional everyday components used in broadband. This includes DRAM (Dynamic Random Access Memory) and non-volatile memory. Substrate materials – the foundational layers used for broadband and AI semiconductors – are also in short supply.

As NCTA explained in its petition: “Driven largely by surging demand from AI, manufacturers are shifting production toward DRAM chips used in data centers, and this shift has tightened supply for the widely used DRAM memory components that support everyday technologies like routers . . . [AI] is driving unprecedented demands for substrate materials, leading to a growing shortage of the necessary materials for semiconductor manufacturing.”

The FCC’s waiver provides some immediate relief for NCTA members and other broadband providers. But the FCC can do more. In a June 3 coalition letter, NCTA and other participants urged the FCC to take broader action: “Ease constraints on alternative sourcing and product redesign by offering expedited validation and approvals for regulated products, along with flexibility for necessary hardware, firmware, or software changes . . . Identify and remove regulatory barriers that slow the expansion of memory manufacturing capacity, both domestically and internationally, to increase overall global supply.”

Substrate material and memory supply were a problem long before the FCC’s March routers ban, and these shortages continue to pose real challenges for broadband as telecommunications infrastructure requirements and AI demand keep growing.

Maryland Has a Long Way to Go on Taxes

With Maryland's new budget going into effect in July for FY 2027, Governor Wes Moore has touted the plan as fiscally disciplined, citing no new taxes or fees. But one year without new increases doesn't reverse Maryland's problematic budgetary trajectory.

Maryland residents and businesses are still living with the tax increases enacted in the current FY 2026 budget, which included a 3% sales tax on IT services; an increase in the vehicle excise tax rate from 6% to 6.5%; an increase in the vehicle emissions inspection fee from $14 to $30; a 3.5% rental vehicle tax; and a new $5-per-tire fee, among others.

Maryland has traditionally been among the least tax-competitive states in the country, and it’s only gotten worse under the Moore administration. According to a Tax Foundation analysis of its State Tax Competitiveness Index, Maryland ranked 42nd on the index in FY 2020 and has since fallen to 46th in FY 2026, where 1st is most competitive and 50th is least.

Neighboring states have also seen their tax-competitiveness rankings slip over that period, but they all remain substantially more competitive than Maryland, according to the Tax Foundation report. In FY 2026, Delaware ranks 24th, Pennsylvania 36th, and Virginia 30th.

The income tax is a big part of why. Maryland’s low tax competitiveness is driven in large part by high income taxes, as the Tax Foundation's full report details, a topic I covered last month. As part of the FY 2026 budget, Maryland created a new top marginal rate for personal income tax at 6.5%, compared to 3.07% in Pennsylvania, 5.75% in Virginia, and 4.82% in West Virginia. Maryland’s corporate income tax rate is also high at 8.25%, compared to 7.99% in Pennsylvania, 6% in Virginia, and 6.5% in West Virginia.

This matters especially because Maryland is an expensive, high-cost-of-living state competing for businesses and workers who have options regarding where they choose to live. Maryland is making itself a harder and harder sell.

Governor Wes Moore needs to get serious about improving Maryland's budgetary situation. As part of that effort, the "Free State" definitely needs to treat improving its tax competitiveness ranking as an economic priority.

Maryland Doesn't Need to Stop Dynamic Pricing

Developments in artificial intelligence continue to raise alarm among the public and lawmakers. Among the many concerns cited about artificial intelligence and automation is dynamic pricing. To this end, Maryland Governor Wes Moore signed legislation last week banning grocery stores and third-party delivery services from using individual shopper data to increase prices "dynamically."

Under dynamic pricing, sellers may use data about shopping behavior to automate and continuously adjust their prices. Under individualized dynamic pricing – sometimes called surveillance pricing in pejorative terms – businesses set different prices for different consumers by charging more to shoppers who appear willing to pay a premium or offering lower prices to customers who might not otherwise buy. Other types of dynamic pricing may include shifting prices at different times of day based on changes in demand or competitive conditions.

The underlying logic of dynamic pricing is straightforward: businesses have always tried to match price to demand, and data-driven tools make doing so easier.

Maryland’s bill drew public support, reflecting broader concern with companies exploring individualized pricing, especially on food and housing as basic needs. Critics frame these practices as predatory: corporations using shadowy algorithms to target and extract as much money as possible from individual shoppers.

However, the alarm reflects a misconception regarding what data collection and algorithmic pricing can actually accomplish. Even the most sophisticated artificial intelligence uses incomplete information and thus imperfect predictions – the same reason why centrally planned economies with government-dictated prices are so inefficient. Consumer preferences change with income, season, family circumstances, competing options, and other infinite variables that are impossible to capture in a dataset. The premise that an algorithm can reliably identify each shopper's maximum willingness to pay overstates the role that data and algorithms play in society.

Dynamic pricing is also already a routine feature of commerce. Airlines adjust fares continuously based on demand, booking patterns, and seat availability. That's why the person sitting next to you on a plane likely paid a different price than you paid for her ticket. Bars and restaurants offer happy hour pricing. Retailers run flash sales, time-limited promotions, and personalized discounts. Even Maryland’s own law acknowledges this reality with its numerous exemptions and clarifications for longstanding practices – promotional pricing, loyalty program discounts, and other temporary price reductions.

Moreover, the alarm over dynamic prices overlooks the consumer benefits. A grocer or other business that makes more sales has more room to keep overall prices low, and dynamic individualized prices can be what closes a sale that otherwise would not have happened. This means that people can buy things that otherwise wouldn’t have fit in their budgets.

Maryland’s law purports to address a public concern by conflating a common business practice with a supposedly harmful predatory practice and without acknowledging the consumer benefits. Maryland should indeed tackle deceptive trade practices in grocery stores and elsewhere, but states should not ban technology before actual harms to consumers materialize. Regulating against possible harms has its consequences – shoppers forgo benefits that they never even see.

Tax Day Reminds Us That Marylanders Are Voting With Their Feet

Ahead of Tax Day, a new report from personal-finance company WalletHub ranks Maryland as 7th in the nation for the highest state tax burden on personal income – Maryland residents send 9.7% of their personal income to state coffers. And that's on top of the money residents pay in federal income taxes and in various state service fees, such as recent increases for vehicle requirements.

Income taxes, specifically, are the main driver of Maryland's high tax burden ranking, according to WalletHub. Maryland places 3rd in the nation for the highest income tax burden, with 4.3% of residents' personal income going to the state through that channel alone. WalletHub also examined property taxes and sales and excise taxes, where Maryland scored better. Maryland places 29th for property taxes (2.5% of personal income to the state) and 40th for sales and excise taxes (2.9% of personal income to the state), meaning it's the income tax load that pushes the overall state’s overall personal tax burden so high.

Maryland’s high tax burden is a major reason for Maryland’s outmigration problem. Even an analysis by the Maryland Chamber of Commerce last year featured Maryland’s troublesome outmigration, explaining that Maryland ranks near last in domestic migration – 45th in the nation. Maryland did have net positive migration in the year examined (July 2023 - July 2024), but that was because of international arrivals (53,100), which masked Maryland residents moving to other states (18,500).

The Chamber of Commerce analysis explained the state’s serious situation: "High taxes, rising living costs, housing affordability challenges and regulatory complexity are pushing residents to states with lower costs, better growth prospects, and more business-friendly climates." The top destinations include Florida, Texas, Virginia, North Carolina, and Pennsylvania – all states that offer lower or no income taxes.

If residents continue leaving for lower-tax, lower-cost states, Maryland may find itself caught in a fiscal cycle or downward spiral that's difficult to reverse – fewer taxpayers and even less room to reduce the burden on those who stay.

Sanders' AI Bill Is a Red Herring and Blackburn's Has Problems

With the White House calling for a national AI framework to end the patchwork of state regulation, two notable proposed pieces of federal legislation have emerged. And the one getting less attention at the moment is the one that matters more.

Senator Marsha Blackburn (R-TN) released a discussion draft of the TRUMP AMERICA AI Act (you read that right, The Republic Unifying Meritocratic Performance Advancing Machine Intelligence by Eliminating Regulatory Interstate Chaos Across American Industry Act) on March 18, 2026, a 291-page federal framework developed in response to the Trump administration's call for a national AI policy. Senator Bernie Sanders (D-VT), joined by Representative Alexandria Ocasio-Cortez (D-NY), introduced the 13-page Artificial Intelligence Data Center Moratorium Act on March 25, 2026. It would halt data center construction until Congress enacts legislation to ensure: that future AI products are "safe and effective"; that AI does “not threaten the health and well-being of working families”; and that AI does not displace jobs. The two AI bills are not comparable in scope or consequence.

The Sanders moratorium bill has received the most mainstream coverage, possibly in part because it is the only one of the two to be formally introduced. But it’s easy to see why all the fuss. The moratorium bill takes advantage of anxieties that translate directly into headlines: job displacement, strain on the power grid, and industrial construction in people's backyards. While these concerns affect real people, the bill's moratorium is ill-conceived and would be harmful. Pausing data center construction pending new AI legislation would be a significant brake on American AI infrastructure at precisely the moment the Trump administration is pushing to accelerate it and would let foreign competitors move ahead.

But Sanders’ moratorium bill is almost certainly a political statement about AI as a threat rather than a realistic proposal. It is unlikely to gain serious legislative traction, and its primary practical effect may be to divert attention from more consequential legislation.

The Blackburn bill is one piece of potentially more consequential legislation. As a proposed comprehensive federal AI framework, it is more technically complex and far-reaching than the moratorium bill. Yet it has received a fraction of the coverage. Other think tanks including the Competitive Enterprise Institute and the Cato Institute have explained how the bill would impose heavy-handed regulation across the AI ecosystem.

Some aspects of Senator Blackburn’s bill that may be problematic and require close attention include: a full-on repeal of Section 230 of the Communications Act of 1934; imposing “duty of care” on chatbot developers; holding AI developers liable for harms beyond existing laws on fair and deceptive practices; requiring federal contracts to use "unbiased" large language models; creating a Department of Energy testing program for adverse incidents in AI systems; and directing DOE to develop certification procedures, licensing requirements, and broad regulatory oversight.

I wrote last week that the federal AI framework needs a light-handed approach grounded in free market competition. I explained that “robust competition among American companies is the precondition for national competitiveness” and consumer satisfaction. While established developers may fare fine under such a burdensome scheme, their products would fall behind other nations not facing such operating and compliance costs. And startups and emerging competitors would fare even worse.

The Sanders moratorium deserves the criticism it has received. But the current Blackburn bill has problematic provisions that deserve scrutiny it has not yet gotten.

White House to Congress: Fix the AI Patchwork

The Trump Administration issued seven AI policy recommendations for Congress on Friday, March 20, 2026, including one for preemption, asking Congress to make sure state legislatures don’t get in the way of AI innovation (Recommendation VII). 

This recommendation is exactly what the moment calls for. Last week, I wrote a FSF Blog post about just this issue. After describing the extraordinarily wide range and volume of AI bills moving through statehouses across the country, I wrote: “What the nation really needs is an overarching federal framework that avoids ex ante heavy-handed regulation and that supplants the growing patchwork of state laws.” The White House has now said the same thing. 

Recommendation VII reads: “Congress should preempt state AI laws that impose undue burdens to ensure a minimally burdensome national standard consistent with these recommendations, not fifty discordant ones.” It clarifies the distinction between federal and state domains of AI regulation. The federal government is better positioned to “supporting innovation” because AI is “an interstate phenomenon” that is part of the “national strategy to achieve global AI dominance.” Absent preepmtion, states may otherwise “unduly burden Americans’ use of AI.” State governments are positioned to regulate AI as it pertains to issues specific to their state such as consumer protection, zoning, law enforcement, and public education.

Here are a few additional details encouraging innovation among the White House’s six other recommendations: “lead the world in AI by removing barriers to innovation” (Recommendation V); “not create any new federal rulemaking body to regulate AI” (Recommendation V); and “streamline federal permitting for AI infrastructure construction and operation” (Recommendation II); The White House also recommends preventing censorship and protecting free speech (Recommendation IV).

Noticeably absent from the seven recommendations, however, is an explicit acknowledgment that free market competition is both a means of achieving the White House’s ambitions and an essential benefit to American consumers. Recommendation VII frames preemption in terms of competing with other nations but overlooks a foundational point: robust competition among American companies is the precondition for national competitiveness. A truly pro-innovation framework would make free market competition an explicit objective in recognition that this helps ensure that the best products and services are made available to consumers at the lowest prices. 

Now, Congress needs to follow through on the White House’s recommendation for preemption. And with a strong commitment to fostering market competition, Congress and existing federal agencies have the opportunity to get AI regulation right.

State Lawmakers Are Not Waiting for Washington to Regulate AI

With annual legislative sessions beginning to wind down, lawmakers in 44 states and D.C. have introduced over 800 bills related to artificial intelligence during the 2026 session so far, according to the National Council of State Legislature’s AI bill tracker. This is a remarkable volume of regulatory interest from lawmakers who have not had much of a chance to understand any possible related market failures or to study the costs and benefits of regulations for a new technology that has only recently entered mainstream use. This regulatory interest represents continued momentum from the past few years. In the 2025 session, the 50 states and D.C. introduced over 1,000 AI bills altogether.

The bills during this and recent sessions cover an extraordinarily wide range of targets and approaches. Some bills target AI developers such as Anthropic and OpenAI. Some target deployers of AI such as social media companies or businesses that use AI internally. Others target other parties such as data brokers. Many bills are sector-specific: AI in healthcare, AI in housing, AI in employment, AI in insurance, and AI in elections. And many bills are issue-specific: for example, lawmakers in the 2026 session have introduced 188 bills in 38 states on AI deepfakes and 22 bills in 22 states covering AI chatbots.

A few examples illustrate the range of the 726 bills pending in statehouses and awaiting governor signatures: An Illinois bill would require AI developers to report safety incidents and publicly publish their protocol on risk management, transparency, and cybersecurity (2026 IL SB3312). A Hawaii bill would require AI deployers to run risk management programs for algorithmic discrimination and cybersecurity, including pre-market and ongoing testing, and recordkeeping (2026 HI SB2967). A Minnesota bill would prohibit, “surveillance-based price discrimination,” or the use of AI in using certain consumer data to set prices (2026 MN HF 3764). A New Jersey bill would require companies to conduct AI safety tests and report results to the state (2026 NJ S 1802). A New York bill would hold companies liable for harm caused by AI chatbots offering medical, legal, and other types of regulated speech (2025 NY S7263). 

So far, 13 states this session have enacted or adopted 14 pieces of legislation. A few examples illustrate the range of what lawmakers are passing: Indiana placed restrictions on when healthcare insurance providers can use AI (2026 IN H 1271). New York state and local government may not use AI to reduce staffing, or as the language reads, from using AI in a way that would displace governments jobs (2025 NY S 8831). South Carolina placed restrictions on how data can be collected from minors and implicated AI in the law (2025 SC H 3431). In Vermont, AI videos of political candidates must now be labeled as such (2025 VT S 23).

In a recent Perspectives from FSF Scholars, my colleague, Joe Kennedy, suggests the need for a streamlined AI regulatory framework that incentivizes the build-out of a robust supporting infrastructure and that encourages competition and innovation. What the nation really needs is an overarching federal framework that avoids ex ante heavy-handed regulation and that supplants the growing patchwork of state laws.

Without such a framework, companies must navigate a growing and inconsistent patchwork of state regulations, each with varied definitions, thresholds, compliance timelines, and enforcement mechanisms. States may still decide to pass legislation on AI as it pertains to their specific state criminal codes, public education requirements, state government use of AI, or other state matters. But at the current rate, an AI developer, deployer, or other AI party could theoretically face 51 different pieces of legislation regulating the same activity. And the burden of complying with this patchwork falls even harder on startups and emerging competitors trying to offer better alternatives for consumers. AI has potential to improve countless dimensions of everyday life. The emerging regulate-first patchwork of state laws is not the path to realizing that potential.