ANNAPOLIS – Maryland business leaders on Tuesday blasted legislation meant to tighten corporate income tax laws and bring in millions of dollars in extra revenue as “universally hated” and “one of the worst tax decisions the Maryland General Assembly could make.”
But an advocacy group for working families said that Maryland residents pay taxes every year and so should the 60 percent of Maryland corporations that did not last year, according to information from the Comptroller’s office.
“People – flesh and blood human beings – pay a variety of taxes,” Sean Dobson of the liberal lobbying group Progressive Maryland told a joint hearing of two legislative committees. “They can’t resort to creative bookkeeping … (but companies) are positively encouraged to get creative and loosey goosey.”
Laws to tighten the corporate tax structure were proposed in the General Assembly last session, but did not pass. On Tuesday, the proposals again came before legislators for discussion prior to the opening of the legislative session in January.
The first, known as combined reporting, would require businesses to report all of their subsidiaries as one entity. The second, alternative minimum assessment, would set a minimum tax to be paid by corporations depending on gross receipts.
The proposed laws are “unfair to entire industries” said Maryland Chamber of Commerce representative Karen T. Syrylo. Businesses would be “forced to increase their prices and pass those prices on to the consumers,” she warned.
“Combined reporting is almost universally considered to be anti-business,” she said, because it is complex, time consuming and expensive. And of alternative minimum assessment she said, “To me, this is one of the worst tax decisions that the Maryland General Assembly could make” because it could be imposed on businesses that aren’t necessarily profitable.
Dobson said Tuesday’s dire predictions by business lobbyists are the “exact same language” that business used to fight laws that made it impossible for corporations to dodge Maryland taxes by transferring profits to Delaware where there is no corporate income tax. Closing that loophole has generated $247 million in revenues to date.
A further tightening of the corporate tax laws, according to the Office of Policy Analysis, could bring in $25 to $50 million while the alternative minimum assessment could increase state revenues by $169 million.
But Joseph R. Crosby of the Council of State Taxation, a nonprofit trade organization, pointed out that corporate income tax was becoming “over the years less important,” making up only 3.6 percent of Maryland’s total taxes in 2004 and that the “elimination of corporate income tax all together…(is) going to get more jobs and employment.”
Dobson, however, presented polls to the legislators, telling them the issue of finding higher revenues for the state will be the “biggest problem you’re going to face over the next couple years.” “It’s hard to imagine that asking companies to pay a little bit more is going to make the sky fall in,” he said. “I don’t understand why corporations get treated better than regular people.”