Combined Reporting Doesn’t Work for Maryland’s Small Businesses

The new legislative session opened with the promise of serious conversation about corporate taxes and the Maryland Chamber of Commerce has been part of the debate. Much of the discussion, however, has centered on “combined reporting,” a complex formula that assesses taxes based on a company’s profits and losses in other states and in Maryland. On Friday, March 6, HB 663 will be heard in the Ways & Means Committee and the Chamber will provide testimony. Our position on the combined reporting is as follows.

Despite claims to the contrary, combined reporting closes no loopholes and adds little to state coffers overall.  Instead, it adds volatility to tax revenues, disadvantages Maryland among its competitors, adds complexity to small businesses, and risks alienating the very industries Maryland is trying to attract.

In the last several years, combined reporting has been exhaustively researched and debated among public policy makers in Annapolis.  Specifically, in 2007 the General Assembly directed the Comptroller to study combined reporting’s impact on corporate tax revenue, and he found no net benefit.  The Maryland Business Tax Reform Commission also weighed the pros and cons of combining reporting, deciding in the end against it.  Here is a summary of those and other studies:

Adopting combined reporting would be a step backward and would only serve to slow the momentum toward a more prosperous Maryland.

The Chamber’s position statement on HB 663 is available online.  If you have any questions contact Mathew J. Palmer, Senior Vice President, Government Affairs, mpalmer@mdchamber.org.

Legislative Issues Tag: Taxes

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