Wednesday, November 05, 2008
Misleading Corporate Tax Data is Back
For the fourth time in recent years, State Senator Paul Pinsky has requested and received data from the State Comptroller’s Office regarding corporate income tax payments. As with each of the prior discredited reports, no meaningful conclusions can be drawn from the data.
- The cover letter to the report from the Comptroller’s Office acknowledges that they are unable to match related corporate entities from their data system, and therefore “this information does not provide a full picture of the corporate income taxes paid by many “businesses” as commonly perceived.” Many large businesses operate through multiple corporate entities, only one of which may be responsible for tax payments.
- The Comptroller’s cover letter also notes that there are several legitimate reasons for a business paying no corporate income tax in a given year, including: (1) Having no profits; (2) Using carry-forward or carry-back losses; and (3) Using state income tax credits. Unfortunately, the report provides no analysis of the reasons certain businesses reported no tax liability.
- The report provides “preliminary” data for the 2006 tax year, even though the returns for some corporations were not yet due when the report was compiled. Similar preliminary data from prior year reports has consistently understated the amount of income taxes paid by businesses.
- Corporate tax payments have significantly increased in the past five years, coupled with a tax increase effective in tax year 2008 that put Maryland in the top one-third of states nationwide in corporate income tax rates. Businesses also paid nearly one-half of the $1.3 billion Maryland tax increase enacted during the past year.
- Maryland businesses are providing extensive tax information to the State Comptroller’s Office to be reviewed by the Maryland Business Tax Reform Commission. A full analysis of that data will provide much more meaningful information than the incomplete data shown in the report to Senator Pinsky.
Senator Pinsky has also written to the 50 largest corporations in Maryland asking that they disclose to him their 2006 corporate tax payment amounts. We find such a letter from a state legislator highly inappropriate. The Maryland Chamber believes that individual businesses should not be coerced into publicly disclosing information that is confidential under state and federal law.
For more information, contact Ron Wineholt at .(JavaScript must be enabled to view this email address).
Related Documents
- Information provided from the Comptroller’s Office to Sen. Pinsky
- Letter sent from Sen. Pinsky to Maryland’s 50 largest corporations
