Senate Budget and Taxation Committee Chairman Edward Kasemeyer told a Howard County Chamber of Commerce breakfast Wednesday that he personally favored rolling back Maryland’s corporate income tax by 1/4% a year for several years.
This would bring Maryland’s 8.25% corporate tax rate – raised four years ago from 7% – closer to Virginia’s 6% rate.
Afterward Kasemeyer emphasized that this was his personal position based on conversations with some members of his committee, and not an official Senate stand, since he had not discussed it with Senate President Mike Miller.
Kasemeyer, a Howard County Democrat, volunteered the proposal responding to questions about business tax incentives in Maryland.
Kasemeyer earlier this year expressed support for widening the sales tax to other services. But at Wednesday’s breakfast, he emphasized he was opposed to repeated proposals to establish corporate taxation based on a method known as “combined reporting,” noting the opposition of a commission that studied the proposal.
“We’re not going to pass it in the Senate,” Kasemeyer flatly declared.
The Business Reform Tax Commission, created in 2007, spent two years studying different ways to fairly assess corporate taxes. A year ago, the commission voted overwhelmingly against recommending combined reporting to the General Assembly.
According to studies done by the comptroller’s office, if combined reporting had been instituted in 2006, the state would have made $100 million more in corporate taxes. However, with combined reporting in 2008, the state would have seen between $13 and $51 million less in revenues. According to the fiscal and policy note included with the bill, the state could make $32 million more in corporate income taxes in 2012.
Combined reporting is a complicated method of calculating corporate taxes based on a single fraction for a group of corporations rather than each corporation calculating its own fraction of income that is deemed related to Maryland. It would shift businesses’ tax liabilities because of the new way income would be measured.
Some businesses based in Maryland and elsewhere would pay less, some would pay more.