Wednesday, February 24, 2010
Chamber Opposes Combined Reporting
The Maryland Chamber of Commerce opposes legislation (SB 354) that would impose a system of mandatory unitary combined reporting for corporate income taxes effective next year.
Current law requires corporations doing business in the state to be taxed based on their payroll, property and sales in Maryland. Combined reporting arbitrarily assigns income to Maryland for all members of a corporate unitary group – even for those corporate entities having no presence in the state.
The Chamber has opposed combined reporting legislation for a number of years. States that have adopted combined reporting have found that it results in massive shifts of tax liability between businesses, with many paying more taxes and many paying less. We believe it’s important to analyze the winners and losers of such a tax change and the impact on Maryland’s economy.
During the 2007 special session, the Governor and General Assembly created the Maryland Business Tax Reform Commission to evaluate the merits of combined reporting and other changes to Maryland business tax structure. The commission has worked hard and will provide lawmakers its recommendations in December 2010. The Maryland Chamber believes the General Assembly should let the commission finish its work.
“The commission should be allowed to evaluate another year of tax data and report back this December without having this issue prejudged by the General Assembly,” Maryland Chamber Vice President of Government Affairs Ron Wineholt said.
The bill would dedicate the proceeds of these tax levies to fund state employee and teacher pensions. The Maryland Chamber believes state employee pension costs are a big problem, but this tax policy change is a poorly-timed, ill-advised solution.
Wineholt encouraged lawmakers to explore options for transitioning away from the unsustainable cost of defined benefit pensions. “Employers should not be asked to fund a level of pension benefits for public employees that they cannot afford to provide to their own employees,” Wineholt said.
