The New York Times had an interesting story on Friday about an IRS report on tax return filing trends in 2008.

I know, I know. “Tax return filing trends can be interesting?” you’re asking yourself. Yep. That’s right. They can be. Now buckle up.

If you haven’t stopped reading already, here’s why: The data shows that in 2008, the country was hemorrhaging millionaires.

In the spring of 2008, when those tax returns were being filed, Maryland passed its controversial “millionaire’s tax” – the 6.25 percent tax bracket for those of us lucky enough to pull in more than $1 million a year. (That “us” in the last sentence was less inclusive of certain reporters/bloggers than you may think.)

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Maryland held on to its ranking in the CNBC survey of the top states for doing business in 2010, coming in near the middle of the pack once again.

The state ranked 27th on the list this year and last.

Virginia, winner of the Northrop Grumman sweepstakes and Maryland’s most frequent foil in business climate discussions, finished second behind Texas. Virginia and the Lone Star State have flip-flopped atop the CNBC rankings in the past four years.

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A $10 million tax credit program for the rehabilitation of historic structures passed the House of Delegates Friday without any debate and appears set to move quickly through the Senate on Saturday.

The Heritage Structure Rehabilitation Tax Credit would be worth 20 percent the redevelopment costs of historic structures and, under the overhaul being pushed by Gov. Martin O’Malley, would have $1 million carved out for newer structures in “Main Street” areas.

The credit has been a key piece of O’Malley’s legislative agenda, which has focused heavily on job creation and stimulating an economic recovery in Maryland.

After spending nearly three months with the legislation, the House approved the bill, HB 475, with a 113-26 vote.

In an effort to keep the process moving, the Senate Budget and Taxation Committee met on the bill before it had been officially referred to them. (B&T held a hearing on HB 475′s companion bill earlier this session and was briefed on the House changes on Thursday.)

There was a brief discussion on a potential amendment, but any thought of changing the bill substantially was abandoned so as not to derail its passage with only two working days left for lawmakers. The committee voted to accept the bill “in concept” and it could make its way to the Senate floor Saturday.

“If we don’t pass a bill, this program goes away,” said Sen. James N. Robey, D-Howard. “We can’t let it go away. It’s too important.”

The Maryland Department of Planning estimates every $1 of tax credit has an economic impact of $8.53, and every $1 million in credits creates 72 jobs.

O’Malley has tried unsuccessfully for the last two years to push through a multi-year extension of the program. Lawmakers, favoring a more cautious fiscal approach, have given the governor smaller, one-year appropriations instead.

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After watching the legislature trim the guaranteed funds for the Heritage Structure Rehabilitation Tax Credit, Gov. Martin O’Malley is pressing for the funding to the popular program to be doubled.

The governor included an extra $5 million appropriation for the program in his supplemental budget, which will face the scalpel-wielding budget conference committee this week.

O’Malley had sought $50 million over three years – $20 million in fiscal 2011 and $15 million each in the two following years.

But, lawmakers opted instead for a $5 million appropriation in 2011, a plan the Senate and House of Delegates appear to agree on. The credit would be back up for annual appropriation from the governor and subject to cuts from the General Assembly.

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With Maryland locked in a battle to land the headquarters of Northop Grumman Corp., state lawmakers were careful Tuesday to look favorably on the defense giant’s biggest competitor – Bethesda resident Lockheed Martin Corp.

The Senate voted 40-6 on H.B. 855, which exempts corporate lodging facilities from the state’s 6 percent sales and use tax. Lockheed’s Center for Leadership Excellence, which opened a little more than a year ago, is the only such facility in the state that meets the requirements of the bill. The $110 million, 300,000-square-foot training facility is located next to the Lockheed headquarters and employs 170 full-time workers.

Northrop’s name has bubbled up often during the legislative session when lawmakers have discussed issues that could impact the state’s image in the eyes of the business community.

“We have to remember that we are in the running for the headquarters of Northrop Grumman, although we are not sure how much in the running we are,” said Sen. Delores G. Kelley, D-Baltimore County.

Northop is considering a site in Rockville as it wraps up its search for a new home in the capital region.

Those in favor of the training facility bill argued such facilities, which are only open to employees of the companies that own them, shouldn’t be treated like hotels. The bill has already passed the House of Delegates.

Sen. Richard S. Madaleno Jr., a Montgomery County Democrat and the head of its Senate delegation, said the Lockheed training center has increased Lockheed employees’ travel to the state by 200 percent, boosting business at local restaurants, stores and even other hotels.

“This is a good deal for the state of Maryland,” Madaleno said. “If you want to say no to this corporation, if you want to say no to other corporations, then feel free.”

Some senators took him up on that offer.

“We don’t have enough money for education, but we do have money to give to the largest corporations, that’s what this bill says,” said Sen. Bryan W. Simonaire, R-Anne Arundel, who voted against the bill.

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One day after the House of Delegates was consumed with an attempt to impeach Attorney General Doug Gansler, the measure slipped by during a House floor session Thursday morning without a mention.

The impeachment articles introduced by Del. Don Dwyer, R-Anne Arundel, were referred yesterday to the House Judiciary Committee, which voted them down 14-6 after a short hearing at which Dwyer refused to discuss why he wants to remove Gansler from office.

Dwyer said yesterday before the hearing that he had prepared a petition to force the bill out of committee, but such an action only applies to bills that haven’t been voted by a committee. Instead, he would have to make a motion to bring the bill to the House floor over the objection of the committee. Such a motion would require 71 votes. With Dwyer carrying only 39 votes in an attempt to keep the impeachment on the House floor yesterday – 101 delegates voted to send it to committee – collecting 32 more votes today was unlikely, if not impossible.

So when the Judiciary Committee’s report came up, the impeachment resolution slipped by without a word from anyone.

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Republican delegates will likely try to amend the governor’s job creation tax credit bill Wednesday to ensure some of the $20 million program goes to help small-business owners.

The bill came to the full House of Delegates for preliminary approval Tuesday, but Republicans asked to delay the proceeding by a day so they could finish drafting their proposal.

House Minority Leader Anthony J. O’Donnell, R-Calvert and St. Mary’s, would not disclose the exact nature of the amendment, but said it would be focused on small businesses.

“We wanted some more time to work on our amendment,” he said. “There has been a concern that this money could only go to large companies when small businesses are the ones that really need the help.”

The $20 million program would give refundable tax credits to businesses that hire unemployed Marylanders in 2010. Originally proposed at $3,000 per credit, both the Senate and House upped the credit to $5,000.

The Senate passed its version of the bill 46-0 on Feb. 26.

I’ll have an update tomorrow on the House action. Check back then.

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The Senate passed unanimously Friday morning a measure that would bump up the reporting date for a state commission studying business taxes, following a 136-1 House of Delegates vote on an identical bill cast Thursday.

While seemingly innocuous on its own, the passage of both bills signals that one of the loudest arguments against moving to a combined reporting corporate tax system will evaporate after Dec. 15. Opponents of the system have urged lawmakers to wait for the Business Tax Reform Commission to issue its report before acting on combined reporting legislation.

A combined reporting tax system would require multi-state corporations to file taxes based an apportioned share of the income of all their subsidiaries.

“Certainly the House would pass it this year and we’re working with the Senate, but it doesn’t seem to be going well,” said Sheila E. Hixson, chairwoman of the House Ways and Means Committee. “Hopefully it will move after the report.”

Sen. Ulysses Currie, a Prince George’s County Democrat and chairman of the Budget and Taxation Committee, has held firm in his position that his committee will wait until the commission issues its report before taking up combined reporting.

“Next year, I know we’ll be working with it in Budget and Tax,” he said.

The dynamic between the two chambers on the combined reporting issue is nothing new. The House passed combined reporting in 2007, but the measure stalled in the Senate and was eventually watered down to legislation that formed the commission to study business taxes.

The commission was originally charged with studying combined reporting, among other topics, and issuing recommendations for the state’s business tax system by Dec. 15, 2011. The bills passed this week – both chambers must still pass each others’ versions – would move the deadline up a year.

“We will have enough data,” said House Majority Leader Kumar P. Barve, D-Montgomery. “There’s no reason to stretch it out for two years.”

Barve is a member of the commission and sponsor of the deadline bill.

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Maryland’s revenue is, once again, coming in lower than first expected and unemployment is, once again, higher than it was before.

Still, state officials see cause for optimism in the otherwise gloomy figures.

The state is expected to write down $66 million in revenue shortfalls over the rest of fiscal year 2010, which ends June 30. State revenue analysts have not yet predicted any writedowns in 2011.

The letter to the governor from the state’s Board of Estimates reads, in part: “Despite the fact that the aggregate revision is relatively modest, the general fund outlook remains poor, with a decline of 5.2 percent in fiscal year 2010, the largest decline on record.”

It continues: “The recession may be over, and Maryland’s economy has not contracted as much as the national economy, but the effects of the recession will linger.”

According to the Associated Press, Gov. Martin O’Malley said the forecast indicates “a leveling off, and that’s the precursor to true recovery.”

The board reported Wednesday afternoon the state expects $12.2 billion in receipts in fiscal 2010, and a modest increase to $12.6 billion in fiscal 2011.

Indeed, the revenue estimates, while still negative, are more encouraging than those that came even six months ago, when O’Malley took more than $1 billion in budget actions, including cuts, through the Board of Public Works in the first half of this fiscal year.

Unemployment in Maryland, meanwhile, hit 7.5 percent in January, up a touch from the 7.4 percent figure in December.

The local government, health care and financial services sectors shed 2,500 jobs in January, according to the Department of Labor, Licensing and Regulation.

Some industries particularly hard hit by the recession, like construction and retail, added jobs during the month.

“While it is not across the board, we are seeing some signs of improvement in Maryland’s employment market,” labor Secretary Alexander M. Sanchez said in written statement.

As O’Malley has been scrounging through the state’s fiscal couch cushions this legislative session to find ways to keep the budget balanced heading into next year, he has also taken aim at the state’s unemployment problem.

There’s a job tax credit in the bill that, in its final form, will likely offer businesses $5,000 refundable tax credits for each unemployed Marylander they hire. The governor has also pushed for an aggressive list of capital project to lower the unemployment rate among construction workers. The rate rose as high as 18 percent during the recession.

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A report released Tuesday by the state’s top tax collector found Maryland would have seen nearly $240 million more in revenue in 2006 and 2007 if the state had adopted a combined reporting business tax system.

Some lawmakers are pushing combined reporting legislation this year, citing the revenue potential and what they see as a more balanced way to tax businesses. The House and Senate bills, which are similar but not identical, would require multi-state corporations to file taxes based an apportioned share of the income of all their subsidiaries. It would stop businesses from shifting income from Maryland to other states with more friendly tax structures.

If the state had adopted combined reporting earlier, tax revenue would have been $145 million higher in 2006 and $92 million higher in 2007.

According to the comptroller’s report, the financial, IT, manufacturing and retail sectors would have seen the largest increase in their taxes in 2007. The utility sector, on the other hand would have paid $26 million less in 2007.

Despite the potential of new revenue during these fiscally challenging times, combined reporting appears to be unlikely, at least this year. A state commission is due to make recommendations on the business tax structure possibly by the end of this year, and will likely address combined reporting. Check out our coverage from last week here.

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