March 9, 2005

ITEP Testimony on SB 403 and SB 748 – Combined Reporting & Corporate Minimum Tax


My testimony today focuses on a trend in the Maryland corporate income tax that is becoming increasingly visible—the emergence of profitable “zero-tax corporations”—and on two effective and complementary solutions to this problem, mandatory combined reporting and a gross-receipts-based minimum corporate tax. Requiring combined reporting of the income of multi-state corporations would help ensure the long-term viability of the Maryland corporate income tax. This reform would also make the corporate tax more equitable by eliminating the incentive for multi-state corporations to avoid state income taxes by artificially shifting income from one taxing jurisdiction to another. And an alternative tax base would mean an important backstop to the regular corporate tax, to help ensure that every large corporation pays some minimal amount of tax.

Read the Full Report (PDF)