Wednesday, March 23, 2011
Business Tax Update
The Maryland Chamber continues to monitor a number of business tax bills. There has been no action on business tax bills to date, but here are a couple issues that have been heard by the Senate Budget and Taxation Committee during the last week:
Alternative Minimum Assessment/Gross Receipts Tax (SB 979): The Senate Budget and Taxation Committee will hear legislation today that would impose a new tax on certain corporations doing business in Maryland based on a percentage of their gross profits or gross receipts. The Maryland Chamber opposes this bill. “Gross receipts taxes are unfair because they are not based on profits or an ability to pay, and penalize industries that have high gross receipts but low net margins,” Maryland Chamber Vice President of Government Affairs Ron Wineholt said. Similar legislation was enacted and later repealed in New Jersey due to the negative impact on business. View the Chamber’s full position statement here.
Nonoperational Income & Throwback Modifications (SB 800): The Senate Budget and Taxation Committee heard legislation last week that would 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 bill would also 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 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. View the Chamber’s position statement here.
If you have any questions, contact Ron Wineholt at .(JavaScript must be enabled to view this email address).
