A number of business tax proposals that the Chamber has historically opposed have been introduced this session. Here is a quick roundup of a few of them:
Combined Reporting (SB 305/HB 731): Legislation has been introduced in both houses of the General Assembly that would impose a system of mandatory unitary combined reporting for corporations. The Maryland Chamber has opposed this legislation for many years. Instituting combined reporting would make Maryland less competitive and cause huge shifts in tax liabilities among Maryland businesses engaged in interstate commerce. In addition, the Maryland Business Tax Reform Commission evaluated the state’s business tax structure, and recommended against implementing combined reporting at this time.
Nonoperational Income & Throwback Modifications (SB 800): Legislation has been introduced that would require the apportionment of nonoperational income of a corporation to Maryland if the company’s principal place of business is directed or managed in the state. The bill would also require the “throwback” of sales to Maryland for apportionment purposes in the corporate income tax for sales that originate in Maryland but are not taxable in another state. The Maryland Chamber opposes this bill. The Maryland Business Tax Reform Commission considered, but chose not to recommend changes in Maryland’s corporate income tax laws regarding nonoperational income and throwback modifications. Use of a throwback modification would increase taxes on Maryland-based employers. The Commission noted that throwback represents a tax on product originators, thereby discouraging investment in the state. None of Maryland’s adjoining states uses a throwback modification. Adoption of this bill would make Maryland’s business climate less competitive.
High Earner Bracket (SB 798): Maryland enacted a temporary income tax increase on high wage earners during the 2008 session. The bracket sunset after taxable year 2010. Legislation has been introduced that would extend the high earner bracket by four additional years, through taxable year 2014 (SB 798). The Maryland Chamber strongly opposes this bill. “This tax falls disproportionately on small business owners, who need to reinvest funds into their companies to create jobs,” Maryland Chamber Vice President of Government Affairs Ron Wineholt said.