State Corporation Income Taxation: An Economic Perspective on Nexus

David Wildasin

No 1011, Working Papers from Oxford University Centre for Business Taxation

Abstract: Acting in the interest of their residents, within limits imposed by Federal statute and by the Constitution, states have incentives to impose taxes on the profits of corporations owned by nonresidents. This paper presents a model within which a state, using an apportionment formula that includes a sales factor, would choose to tax the income of out-of-state corporations that derive revenues from the sale or licensing of intangible assets to in-state customers, provided that such corporations have sufficient nexus to be taxable. Although such policies enable states to capture rents from nonresidents, they also introduce tax distortions by imposing implicit tariffs on sales by out-of-state firms.

Keywords: Corporate Taxation; Nexus (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
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Citations: View citations in EconPapers (1)

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Journal Article: State Corporation Income Taxation: An Economic Perspective on Nexus (2010)
Working Paper: State Corporation Income Taxation - An Economic Perspective on Nexus (2010)
Working Paper: State Corporation Income Taxation; An Economic Perspective on Nexus (2009)
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