The chairman was in a playful mood at the State House the other day.

And why not?

His day of hearings began with a now familiar scene: Representatives of the state Department of Labor and Training. Again. Talking about delays in the processing of unemployment claims. Again.

Next on the agenda, yet another symptom of this never-ending recession: About 47,000 Rhode Island households, having fallen on hard times, are taking part in the government’s food stamp program.

After that, a lengthy list of hearings on a variety of tax measures.

So when the session was at long last nearing an end, along came what was arguably the most complex and controversial of the entire day’s events.

And that’s when House Finance Committee Chairman Steven M. Costantino decided to have some fun.

At issue was a bill that would require corporations to use something called “combined reporting” when tallying up their income for Rhode Island tax purposes.

Under current law, Rhode Island requires corporations to file their tax returns to the state on a “separate company” basis. So, generally speaking, a corporation that has subsidiaries or affiliates in several states pays tax to Rhode Island based only on the company’s operation in Rhode Island.

The problem, some people say, is that this system lets multistate corporations deliberately shift income out of states that have comparatively high corporate income taxes (such as Rhode Island) and into states that have comparatively low corporate income taxes, or none at all (such as Nevada). So those companies may pay little in corporate income tax to Rhode Island as a result.

One of the points that opponents raised at the hearing went something like this: If Rhode Island were to require combined reporting, the state would be viewed as an unappealing place to do business.

And that’s not good, said R. Kelly Sheridan, counsel for the Greater Providence Chamber of Commerce. After all, Rhode Island has improved in the Tax Foundation’s annual listing of the most attractive states from a tax perspective.

Rhode Island is now 46th among the states.

It was 49th last year, and 50th the year before.

So Rhode Island needs to “stay the course,” continue its recent progress and forget about combined reporting, the bill’s opponents said.

That’s when Costantino began playing a bit.

If the Tax Foundation scores Rhode Island based mainly — or even partly — on its high tax rates, why not lower Rhode Island’s sales-tax rate, while broadening the base of items to which the rate applies? Costantino wanted to know.

Nobody replied. They didn’t have to. They all knew what this was about. It’s called perception.

When national surveys look at Rhode Island, they see a 7-percent sales-tax rate — one of the highest in the nation — and Rhode Island’s ranking plunges.

In many other states, particularly in the South, sales-tax rates are comparatively low. But nearly everything that’s sold in those states — including services — gets taxed.

Here, Rhode Islanders get to buy a lot of their goods and services without paying a sales tax on them.

But that point doesn’t matter when it comes to the national rankings.

The same is true for Rhode Island’s personal income-tax rates. The highest is 9.9 percent — high enough to give the ratings people indigestion.

So why, they say, can’t Rhode Island be more like Massachusetts, where the rate is just 5.3 percent?

It doesn’t matter that Rhode Island lets you claim a whole bunch of deductions, exemptions and credits that some other states, such as Massachusetts, don’t allow.

(Why, the great People’s Republic of Massachusetts won’t even let you deduct charitable contributions — even to the most politically correct organizations.)

When it comes to taxes, perception is key.

And so it is when it comes to Rhode Island’s corporate income tax rate. It’s 9 percent, the second-highest in New England.

Come next year, it’ll be the highest, as Massachusetts lowers its corporate income-tax rate in stages.

But that declining rate in Massachusetts comes with a catch, said Peter Asen, associate director of Ocean State Action, a coalition of community groups and other organizations.

It’s called — you guessed it — combined reporting.

Of the six New England states, four require combined reporting. Connecticut is considering it; Rhode Island is, too.

Opponents don’t like it, for much the same reason they don’t want to broaden the number of items to which Rhode Island’s sales-tax rate applies.

Combined reporting means that some businesses will have to pay more tax than they do now.

How many businesses? Well, the Rhode Island Division of Taxation looked at the 2006 corporate income-tax returns of 65 companies. They had an aggregate Rhode Island corporate tax liability of $5.9 million.

After a recalculation using a combined reporting system, the agency found that the companies’ tax liability would have been $14.4 million.

In other words, combined reporting would result in more taxes.

But the agency, in its study issued in December, also found this: Of the 65 corporations in the sample (none of which was identified), 9 percent would have seen a tax decrease from combined reporting, 27.5 percent a tax increase, and the remaining 63.5 percent no change.

And guess what: It’s not the 9 percent that are complaining. It’s not the 63.5 percent, either.

Don’t get me wrong. There are strong arguments on either side of this hot-button issue.

For instance, opponents say, in part, that combined reporting would make the tax compliance work of multistate corporations too complex and discourage economic development.

Proponents say, in part, that combined reporting gives a truer tax picture of multistate corporations, and that it would “level the playing field” for local businesses that operate entirely within Rhode Island.

But let’s be honest and forget about the side issues. The main point is that combined reporting would mean that some big, multistate businesses would wind up paying more in tax to Rhode Island.

Whether that’s good or bad depends on where you stand. There’s no easy answer.

My bet, in case you’re wondering, is that the General Assembly will seriously consider — in this session, and perhaps very soon — lowering the state’s overall corporate income-tax rate, but linking that with combined reporting.

The result? Some bigger businesses would pay more in tax. But at the same time, Rhode Island’s national ranking would rise.

In the end, it’s all about perception.

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