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An Act To Improve Corporate Tax Fairness by Amending the Rates Imposed on Corporate Income
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 36 MRSA §5200, sub-§1-A, as enacted by PL 2017, c. 474, Pt. E, §2, is amended to read:
 
1-A. Imposition and rate of tax beginning 2018 and 2019.   For tax years beginning on or after January 1, 2018in 2018 and 2019, a tax is imposed for each taxable year at the following rates on each taxable corporation and on each group of corporations that derives income from a unitary business carried on by 2 or more members of an affiliated group:
 
In the case of an affiliated group of corporations engaged in a unitary business with activity taxable only by Maine, the rates provided in this subsection are applied only to the first $3,500,000 of the Maine net income of the entire group and must be apportioned equally among the taxable corporations unless those taxable corporations jointly elect a different apportionment. The balance of the Maine net income of the entire group is taxed at 8.93%.
 
In the case of an affiliated group of corporations engaged in a unitary business with activity taxable both within and without this State, the rates provided in this subsection are applied only to the first $3,500,000 of the net income of the entire group and must be apportioned equally among the taxable corporations unless those taxable corporations jointly elect a different apportionment. The balance of the net income of the entire group is taxed at 8.93%.
Sec. 2.  36 MRSA §5200, sub-§1-B  is enacted to read:
 
1-B.  Imposition and rate of tax beginning 2020.     For tax years beginning on or after January 1, 2020, a tax is imposed for each taxable year at the following rates on each taxable corporation and on each group of corporations that derives income from a unitary business carried on by 2 or more members of an affiliated group:
 
In the case of an affiliated group of corporations engaged in a unitary business with activity taxable only by Maine, the rates provided in this subsection are applied only to the first $3,500,000 of the Maine net income of the entire group and must be apportioned equally among the taxable corporations unless those taxable corporations jointly elect a different apportionment. The balance of the Maine net income of the entire group is taxed at 9%.
 
In the case of an affiliated group of corporations engaged in a unitary business with activity taxable both within and without this State, the rates provided in this subsection are applied only to the first $3,500,000 of the net income of the entire group and must be apportioned equally among the taxable corporations unless those taxable corporations jointly elect a different apportionment. The balance of the net income of the entire group is taxed at 9%.
Sec. 3. 36 MRSA §5200, sub-§§2 to 4, as amended by PL 2017, c. 474, Pt. E, §3, are further amended to read:
 
2. Business activity only within Maine.   For purposes of subsections 1 and, 1-A and 1-B, with respect to a taxable corporation or group of corporations that derive income from a unitary business carried on by 2 or more members of an affiliated group with income from business activity that is taxable only by Maine, "income" means Maine net income.
 
3. Business activity within and outside Maine.   For purposes of subsections 1 and, 1-A and 1-B, with respect to a taxable corporation with income from business activity that is taxable both within and without this State, "income" means the corporation's net income. The tax amount computed under subsections 1 and, 1-A and 1-B must then be apportioned under the provisions of chapter 821 to determine the amount of tax imposed on that corporation.
 
4. Business activity within and outside Maine; unitary business.   For purposes of subsections 1 and, 1-A and 1-B, with respect to taxable corporations that derive income from a unitary business carried on by 2 or more members of an affiliated group with business activity that is taxable both within and without this State, "income" means the net income of the entire group. The tax amount computed under subsections 1 and, 1-A and 1-B must then be apportioned under the provisions of chapter 821 for the entire group to determine the amount of tax imposed on the taxable corporations.
 
SUMMARY
This bill establishes 2 new tax brackets and 3 new rates for corporate income tax purposes for tax years beginning on or after January 1, 2020. Under the bill, corporate income between $2,000,000 and $3,000,000 is taxed at the rate of 8.5% and corporate income between $3,000,000 and $3,500,000 is taxed at the rate of 8.75%; such income is taxed under current law at the rate of 8.33%. The top tax rate, which is imposed on corporate income over $3,500,000, is increased from 8.93% to 9%.