Business groups decry tax possibilities
Maryland business groups implored a commission reviewing the state's corporate tax structure to leave it alone. At that same hearing, last night in Annapolis, public interest groups asked the panel to recommend combined reporting as a matter of fairness.
The Maryland Business Tax Reform Commission, established in 2007, is to submit its report to the General Assembly in about a month. Lawmakers will review the panel's recommendations and could propose legislation establishing combined reporting or making other corporate tax changes. Last night's hearing gave the public a chance to weigh in, and dozens signed up to testify.
Combined reporting is one of the tax ideas bubbling up in Annapolis. Newly reelected Gov. Martin O'Malley and legislative leaders say the economy remains too weak to tap citizens and businesses for more state revenue, but other lawmakers are eyeing certain taxes. State officials also must close a budget hole of at least $1 billion. At a briefing today, legislators could learn that it's actually much larger.
One of the tax ideas with populist appeal is combined reporting, which is a change in accounting rules. It would prohibit regional and national companies from sheltering Maryland profits in states with lower taxes.
It's unclear how much additional money the state could gain from moving to combined reporting. Fiscal analysts estimated the state could generate as much as $170 million more annually, but that number is based on pre-recession company profits and does not take into account companies moving to other states if combined reporting is enacted.
"The juice is not worth the squeeze at this time," said Gene Burner, president of the Manufacturers' Alliance of Maryland.
Burner and others called combined reporting "burdensome" and "unpredictable."
Still, some groups called combined reporting a matter of fairness, saying large businesses should not be able to dodge Maryland taxes.
Maryland Public Interest Research Group supplied the tax panel a list of small businesses that are in favor of combined reporting. The group says combined reporting would help level the playing field between small, Maryland-only establishments and their larger competitors.
The tax commission report is due Dec. 15.