State Corporation Income Taxation; An Economic Perspective on Nexus

David Wildasin

No 2009-08, Working Papers from University of Kentucky, Institute for Federalism and Intergovernmental Relations

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.

JEL-codes: G01 H7 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2009-03
New Economics Papers: this item is included in nep-acc and nep-pbe
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http://www.ifigr.org/publication/ifir_working_papers/IFIR-WP-2009-08.pdf (application/pdf)

Related works:
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 (2010)
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