Mandatory unitary combined reporting directly targets those businesses Connecticut most needs to grow jobs and restore economic growth. CBIA's Bonnie Stewart told the General Assembly's Finance Committee Monday.
"Hitting our economic-base industries with this tax reporting system will do nothing to help them create and keep good jobs here," Stewart testified, urging the committee to reject HB 6628, the legislative proposal imposing unitary reporting.
She noted that Connecticut, in passing a number of modfications to the state corporate income tax, already addressed issues raised by supporters of the bill.
"Connecticut rejected the reporting system nearly a decade ago," she told the committee. "Instead, lawmakers adopted add-back provisions to address perceived abuses and generate addiitonal revenues. As times changed, a provision asserting economic nexus also was adopted.
"Connecticut has been there, done that. It's time to move forward and work together to create a climate that encourages private sector investment, which will increase opportunities for the people of Connecticut."
Joseph Crosby, COO and senior policy director at the Council on State Taxation, told the committee that states with mandatory unitary combined reporting (or MUCR) experienced economic declines 16 percent greater than other states
"Proponents ... fail to acknowledge the evidence that adopting MUCR hinders investment and job creation," Crosby said. "States that use separate entity reporting have experienced higher job growth than have states with MUCR.
"Studies show that MUCR is the most costly way for the State to raise revenue because of its negative impact on job creation."
Kevin Sullivan, the state's tax commissioner, told the committee combined reporting was "problematic," advocating caution while echoing the tone Gov. Dannel Malloy set on the topic during a news conference Monday.
"We have our own collection of employers in our state. I need to understand what that does to our competitiveness with respect to our group of employers," Gov. Malloy told reporters.
Committee co-chair Sen. Eileen Daily (D-Westbrook) said more information was needed to assess whether combined reporting made sense.
The committee's ranking House Republilcan, Rep. Sean WIlliams (R-Watertown), challenged testimony from a state employees union representative.
"I guess I would argue that Connecticut is already one of the worst states in which to do business," Rep. Williams said. "Whether it is insurance costs, whether it is energy costs, whether it is taxes, you name it, Connecticut, I think, is pretty well recognized as one of the worst states to create jobs."