Thursday, March 05, 2009
Chamber Opposes Combined Reporting Bill
The House Ways & Means Committee will hear legislation today that would implement a system of mandatory unitary combined reporting for corporate income taxes beginning this year (HB 1244). The bill would also direct the comptroller to administratively reduce the corporate income tax rate in tax year 2011 based on a portion of the estimated revenue yield from this legislation.
The Maryland Chamber opposes this bill. We believe it needlessly interrupts the thoughtful strategy enacted by the Maryland General Assembly in 2007, when it established a study commission to collect data and study business taxes in Maryland.
“This bill ignores the data, pulls the plug on the study, and takes an uncertain leap into a combined reporting tax system for corporations,” Maryland Chamber Vice President of Government Affairs Ron Wineholt said.
The Maryland Chamber opposes combined reporting because it would place Maryland businesses at a competitive disadvantage. None of Maryland’s competitor states have enacted a combined reporting tax system. Such a system adds significant complexity and requires additional staff resources among businesses reporting the tax, as well as the Comptroller’s Office in auditing and litigating the tax. In addition, combined reporting will produce winners and losers among Maryland taxpayers, with some businesses paying more, others less.
The fiscal impact of combined reporting is uncertain. The Comptroller’s Office yesterday released its initial observations based on the data collected for the tax study. They indicated that they’ve made progress in evaluating the issue, but that more work is needed to understand the impact of combined reporting. The Maryland Chamber believes we should let the Comptroller’s Office and the Study Commission do its work before rushing to enact combined reporting legislation.
Read the Chamber’s complete position statement on HB 1244 here.
More on Yesterday’s Comptroller’s Report
Yesterday the Comptroller’s Office released a report evaluating the impact on state revenues of changing Maryland’s corporate income tax law to a system of combined reporting. Despite “many, if not most” of the 6,100 corporate groups representing 96,400 separate entities reporting the requested data for tax years 2006 and 2007 correctly, the Office was not able to provide a fiscal estimate of the proposed tax change. The Comptroller’s Office noted that the data has shed light on the nature of the corporate income tax base, and did offer specific fiscal estimates for proposals regarding throwback rules, allocation of nonoperational income, and single-factor apportionment. View the comptroller’s report below:
For more information, contact Ron Wineholt at .(JavaScript must be enabled to view this email address).
