Combined Reporting: Amid All the Fuss There Are No Clear Winners


Welcome to a new year, new state legislative sessions, and more combined reporting proposals. The list of states adopting combined reporting continues to grow — Michigan, Massachusetts, New York, Vermont, West Virginia, and Wisconsin1 are among the most recent adopters (or expanders) of combined reporting. While state legislators are implored to adopt combined reporting as the cure-all to ‘‘fix’’ the corporate income tax, there is evidence that adoption of combined reporting may not, in fact, be an antidote to make a meaningful difference to increase corporate income tax revenue. The recently released ‘‘Fox report’’ commissioned by the Tennessee comptroller of the treasury found that combined reporting does not (all things considered) produce more tax revenue. Thus, we encourage legislators to look before leaping into the combined reporting pool.

In this Pinch of SALT, we will provide a brief overview of combined reporting followed by a discussion of its perceived benefits along with the results of recent studies on combined reporting which highlight its unpredictable results. Finally, we will discuss why combined reporting is not the remedy to cure the illness plaguing the states.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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