Washington City Paper’s Loose Lips column is a must read for all of us interested in District politics and policy. In today’s edition, LL focuses on one of DC Fiscal Policy Institute’s top agenda items this budget season: combined reporting.
Devoted readers of the District Dime have read about combined reporting. You might have even watched our video.
Here’s why combined reporting is so important: If Mayor Gray and the DC Council fail to implement this important tax reform, which is already happening in 23 states, DC’s budget shortfall will grow by $23 million in Fiscal Year 2012. In four years, the District will lose out on more than $80 million, according to DC Chief Financial Officer Natwar Gandhi.
Dr. Gandhi supports combined reporting. So does Ward 2 Councilmember Jack Evans, the chair of the DC Council’s Committee on Finance and Revenue. Here’s what Evans told LL: “I don’t see any reason why we shouldn’t do it.” Economists and tax experts also agree: They say combined reporting is the most comprehensive way for states to stop corporations from evading taxes at the local level.
So who is against it? As reported in LL, corporations that operate in multiple states. Without combined reporting, companies that operate in multiple states, like Comcast, Pepco, and Walmart, can shift the profits they make in DC onto the books in other states that have lower ‘ or no ‘ business taxes. That means these corporations have an unfair advantage over DC’s local, small businesses, and it places the burden on individual taxpayers and small businesses to pick up the slack in lost revenue to help fund schools, libraries, health care and roads.
Twenty-three states of the 45 with a corporate income tax already have enacted combined reporting. DC is supposed to be the 24th, based on the legislation passed in the budget last year. Multi-state corporations such as CVS and Marriott already follow the combined reporting law in these 23 states, and the law has not proven to be a disincentive to do business there. In fact, many of the states with combined reporting have been some of the most economically-successful states in the country.
DCFPI urges Mayor Gray to listen to Dr. Gandhi and Jack Evans and implement combined reporting in next year’s budget.
