STATE CORPORATION INCOME TAXATION: AN ECONOMIC PERSPECTIVE ON NEXUS
Acting in the interest of their residents, U.S. states have incentives to impose taxes on the profits of corporations owned by nonresidents, within limits imposed by federal statutes and by the Constitution. 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.
Year of publication: |
2010
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Authors: | Wildasin, David E. |
Published in: |
National Tax Journal. - National Tax Association - NTA. - Vol. 63.2010, 4, p. 903-24
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Publisher: |
National Tax Association - NTA |
Saved in:
freely available
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