Corporate "combined report" taxation

The Center on Budget & Policy Priorities, “one of the nation’s premier policy organizations working at the federal & state levels on fiscal policy & public programs affecting low- and moderate-income families and individuals, released a report the first part of last month describing tax reform measures known as “combined reporting.”

Twenty states have already adopted the reform, according to a press release issued on April 5th., with New York and West Virginia just enacting legislation on April 1 and 4, respectively.

“To avoid state corporate income taxes,” the release says, “a number of large, multi-state companies have devised strategies to move profits out of states where they are earned, and into those where they are taxed at lower rates or not at all, using subsidiaries largely or solely as tax shelters in the ‘haven states’ like Delaware, and then artificially shifting funds to them as royalties or rent.” Combined reporting creates an arena in which parent companies and most of its subsidiaries are treated as a single corporation for income tax purposes; the state taxing a share of the company’s combined nationwide income.

Neither Ohio, Kentucky, nor Indiana use this method according to the Center’s report.