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.
Comments
Just keep driving out the private business and then we will all be employed by the state. Oh! That would be socialism - welcome to little Obamaland.
Posted by: Teajay | November 10, 2010 9:06 AM
Why not just move to a statewide VAT tax? Then you know all economic activity in the State is assessed the tax.
Posted by: Troup | November 10, 2010 9:19 AM
It seems that we only speak of raising taxes in this State. How many businesses, with the ability to do so, have left Maryland for nearby States with fewer tax burdens. Would the committee not look at the possiblity of lessening taxes on businesses as a way to intice more businesses into the State thereby expanding the tax base?
Posted by: reader | November 10, 2010 9:38 AM
The business organizations should have created PACS or independent expenditure committees to legally pump millions into ads to offset the millions spent by O'Malley and national Demcratic and labor groups that slandered Bot Ehrlich 24/7. The overwhelming media buys combined with the obvious bias of the Baltimore/DC media reporting on the recent campaign led to O'Malley's landslide.
I don't understand what mercy or just plain sympathy the businesses of MD expect from the lawyers and career pols who run the MD Assembly, let alone from O'Malley who is totally devoted to an economy controlled by government.
VAT is a good idea, but the Democrats would never repeal the income tax, a step needed to even begin a VAT in MD.
Sen. Harris was blasted by the National Democatic Congressional Committee ads merely for hinting he'd consider a VAT(in combination with getting rid of the progressive income tax.)
Posted by: Didactic1 | November 10, 2010 9:45 AM
Democrats at all levels must win the war of words that the republicans and corporations have waged on what have typically been democratic stances. The phase "business friendly" has always meant that a community would provide a business the infrastructure, workforce, and legal structure to grow in exchange for the payment of a fair share of corporate taxes to help with community services and maintainence, pay a wage that allows the worker to be a productive member of society, and be a good corporate citizen with things like the environment and rule of law. Corporations have "spun" this entire picture into what is now "job killing". This must stop. We all know that taxes do not effect the health of businesses, they simply make the business look at issues like executive pay packages and realistic profit margins....these are good things for the people! Democrats must win the war of words and voters must hold them to it.
Posted by: Cindy Walsh | November 10, 2010 9:57 AM
Were is the list of small businesses provided to MaryPIRG... I would be interested in knowing which businesses I shouldn't patronize anymore.
Posted by: Gunpowder Chronicle | November 10, 2010 10:11 AM
Hasn't the Legislature/O" Mally done enough - 1st the stupid "Millionaire Tax" chased those constituents out of the State - then the 6% sales tax.
Posted by: M. Joan | November 10, 2010 10:13 AM
Marylanders got what they voted for last week. The next four years should be very interesting. Watch the tax hikes come flying at us unabated since O'Malley has nothing to lose now. I'm out of this corrupt state!
Posted by: Scott | November 10, 2010 10:14 AM
Combined Reporting is way overdue. At least 23 states use Combined Reporting in its Corporate Income Tax. Why should Maryland profits be taxed in another state? These are multi-national corporations that Maryland small businesses have to compete with. Level the playing field!
Posted by: Creekman | November 10, 2010 10:34 AM
No surprise here as Annapolis continues to push employers out of state with its tax and spend policies.
Posted by: jay | November 10, 2010 10:59 AM
That's right, deep thinkers, don't tax the businesses and millionaires! Let the poor and middle-class individuals make up for the tax burden!
It's already worked out so well in the last 10 years, with abosolutely no job growth and whatnot.
Posted by: Paul_D | November 10, 2010 11:55 AM
Here we go again. The liberal Democrats chasing more business out of the state.
Posted by: leon | November 10, 2010 11:58 AM
Don't react to something without understanding the issue. Combined reporting is not a tax increase (despite the corporate spin) - it is an elementary tax fairness issue. If I run a small corner store, I cannot afford to pay millions to the likes of Ernst & Young or KPMG to set up tax shelters where I transfer my profits earned in Maryland to a subsidiary in another state and pretend that the income was earned there. And that puts me at an unfair competitive disadvantage with a large corporation who can do precisely that. So I effectively pay a greater share of my income in taxes than the large coproration, even though we may theoretically be taxed at the same rate. Profits earned in Maryland should be taxed in Maryland, plain and simple. If Company B and Company C pay their fair share of MD taxes, Company A should, too - they shouldn't get to pretend that their income was earned in Delaware when it was earned in Maryland.
And before you start going off about how "businesses will flee" because of combined reporting, look at some real data about investment and job growth (or in recent years, higher vs. lower job loss) between the 23 combined reporting states and the 22 non-combined reporting states (leaving out the 5 states without a corporate income tax).
Posted by: Fact Checker | November 12, 2010 10:48 AM