My testimony examines a problem facing not just Maryland, but a number of different states – the erosion of the corporate income tax and the related emergence of profitable “zero-tax corporations.” I also will discuss the single best strategy available to lawmakers seeking to respond to the problem of corporate tax avoidance – mandatory combined reporting. Requiring combined reporting of the income of multi-state corporations would help ensure the long-term viability of the Maryland corporate income tax. It would also make the corporate tax more equitable – both among businesses and between businesses and individual taxpayers – by eliminating the incentive for multi-state corporations to avoid state income taxes by artificially shifting income from one taxing jurisdiction to another. Maryland is one of nine states in which combined reporting has been seriously considered as a strategy for shoring up the corporate tax base in 2007 alone. Two of these states (including neighboring West Virginia) have enacted combined reporting in 2007.