Maryland business gets a great return on taxes
Don Fry has a piece in Center Maryland opposing combined reporting for multistate corporations doing business in Maryland. Essentially combined reporting would reduce companies' opportunities to game the tax system. Companies say it would be fiendishly complicated to implemenet. Fry details what businesses contribute to the state. Fry:
Business share of state’s operating funding. Approximately $2.5 billion of the state’s $13 billion in revenues to the state’s General Fund in 2008 was derived directly from business taxpayers mostly through corporate income taxes, individual income taxes, sales taxes, and property taxes, along with other industry-specific taxes. That amounts to 19.2 percent of the state’s general operating revenues.
What Fry neglects to mention is that, dollar-for-dollar, business gets more out of government spending in Maryland than in almost any other state. Check out the table below from the Council on State Taxation, but big-business lobby in state taxes. In the ratio of what it pays in taxes to what it gets in return, Maryland business is better off than business in any other state except Nevada.
The whole COST study is here. This is not an argument to raise Maryland biz taxes. It's a suggestion to put things in perspective. Here is the table. The lower the ratio, the more business gets in government services per tax dollar paid. 
Comments
Very interesting point.
I think the best argument against combined reporting is that it may increase the costs of doing business for certain businesses simply by requiring more paperwork (not to mention the increased taxes). That having said, many businesses already have to do this for their operations in other states, so it might not really be that much of a change, all things considered.
As someone who opposes tax increases in general, I realize that we have to pick our battles. This is not a hard one to give up on, as far as I am concerned. There are many other issues in MD that we could tackle to offset any potential negative consequences this would cause.
Posted by: John J. Walters | February 7, 2011 1:05 PM
We need to stop being such tax-o-phobes in this state, and country for that matter. No one wants higher taxes, but closing loopholes that allow companies/ individuals to game the system need to be dealt with. That isn't being hostile towards business, that is being fair.
Simplify the code; close loopholes; go after cheats effectively and with gusto - make playing by the rules the cheapest economic alternative.
Posted by: hampdenjames | February 7, 2011 2:28 PM
Look at Table 6 of the report. It shows that as a percentage of the state's gross domestic product (which the report refers to as the "gross state product"), business taxes paid to Maryland state and the various localities are among the lowest in the country (just above the bottom quintile).
Posted by: Stuart Levine | February 7, 2011 10:03 PM
I look at this another way and see it as another example of corporatism in Maryland. Jay remember that long list of corporate CEOs lining up behind O'Malley during the election?
Many of the big corporations in MD fall into the industry O'Malley and the Dem majority favor. They back his agenda they get the goodies or spared the pain.
Also check out how many of them give generous donations to the MD Democratic party.
Posted by: Mark Newgent | February 11, 2011 11:16 AM
23 states and the District of Columbia have adopted Combined Reporting. The two largest are Texas and California. Have any of the 100 largest corporations in the USA left those states because of Combined Reporting? No! Does Maryland get all the tax that is due them from those large corporations? Probably not. A lot of tax money due Maryland goes to states using combined reporting. Maryland should pass Combined Reporting and level the playing field.
Posted by: Somd Native | February 17, 2011 3:06 PM