Taxation-State and Local Commons^™

How To Design An Antiracist State And Local Tax System, Francine J. Lipman

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Since the first ship of enslaved African people landed in Virginia in 1619, racist policies in institutions, systems, structures, practices, and laws have ensured inequity for people of color. These racist policies include every imaginable variant of injustice from slavery to lynching, to segregation, and to economic injustices, including those delivered through tax systems today. Although facially color-blind, tax systems have long empowered the explosion of white wealth and undermined wealth accumulation for Black families and communities of color. State and local tax systems, especially in the South, have deeply-rooted racist fiscal policies, including Jim Crow laws that continue to …

How The State And Federal Tax Systems Operate To Deny Educational Opportunities To Minorities And Other Lower Income Students, Camilla E. Watson

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The importance of education cannot be overstated. Education is a core principle of the American Dream, and as such, it is the ticket to a better paying job, homeownership, financial security, and a better way of life. Education is the key factor in reducing poverty and inequality and promoting sustained national economic growth. But while the U.S. Supreme Court has referred to education as "perhaps the most important function of the state and local governments," it has nevertheless stopped short of declaring education a fundamental right guaranteed under the Constitution. As a consequence, because education is not considered a fundamental …

Distortion Of Income In A Single-Factor Sales Formula World, Walter Hellerstein

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In this article, Hellerstein describes the framework governing constitutional challenges to state income tax apportionment formulas in light of the widespread adoption of single-factor sales formulas and speculates as to whether a recent Michigan court decision invalidating the application of such a formula on constitutional grounds might be a harbinger of things to come.

Taxing Remote Sales In The Digital Age: A Global Perspective, Walter Hellerstein

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This Article addresses three fundamental questions raised by the taxation of remote sales in the digital age from a global perspective, but focuses on the implications, if any, of the answers to these questions in the global context for the U.S. subnational retail sales tax. First, should remote sales be taxed under a consumption tax? Second, if the answer to the first question is “yes,” where should such sales be taxed? Third, how can remote sales be taxed effectively under a consumption tax in the digital age?4

Deciphering The Supreme Court's Opinion In Wynne, Walter Hellerstein

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In Wynne, the Supreme Court held that Maryland's personal income tax regime violated the dormant Commerce Clause because It taxed income on a residence and source basis without giving a credit to residents for in· come taxed on a source basis by other states. The Court suggested, how· ever, that a state may tax residents on all their Income without providing a credit for taxes paid by other states if the state did not tax nonresidents on income from sources within the state, even though such a taxing regime might result in double taxation of interstate commerce.

Heal The Suffering Children: Fifty Years After The Declaration Of War On Poverty, Francine J. Lipman, Dawn Davis

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Fifty years ago, President Lyndon B. Johnson declared the War on Poverty. Since then, the federal tax code has been a fundamental tool in providing financial assistance to poor working families. Even today, however, thirty-two million children live in families that cannot support basic living expenses, and sixteen million of those live in extreme poverty. This Article navigates the confusing requirements of an array of child-related tax benefits including the dependency exemption deduction, head of household filing status, the Earned Income Tax Credit, and the Child Tax Credit. Specifically, this Article explores how altering the definition of a qualifying child …

Federal - State Tax Coordination: What Congress Should Or Should Not Do -- Testimony Of Walter Hellerstein On Tax Reform: What It Means For State And Local Tax And Fiscal Policy, Before The Committee On Finance, Walter Hellerstein

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Testimony of Walter Hellerstein, Francis Shackelford Professor of Taxation Distinguished Research Professor, before the Committee on Finance, hearing on Tax Reform: What It Means for State and Local Tax and Fiscal Policy, United States Senate, April 25, 2012.

Just A Matter Of Fairness: Tax Consequences Of The Service’S Revised Community Property Treatment Of California Registered Domestic Partners (Rdps), Francine J. Lipman

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No abstract provided.

Is "Internal Consistency" Dead?: Reflections On An Evolving Commerce Clause Restraint On State Taxation, Walter Hellerstein

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Under the "internal consistency" doctrine articulated by the U.S. Supreme Court under the dormant Commerce Clause, a state tax must be structured so that if every state were to impose an identical tax, interstate commerce would fare no worse than intrastate commerce. Although a relatively recent addition to the Court's Commerce Clause jurisprudence, the doctrine has played a significant role as the basis for the judicial invalidation of a wide array of state and local taxes. In American Trucking Associations, Inc., v. Michigan Public Service Commission, 545 U.S. 429 (2005), however, the Court sustained an admittedly "internally inconsistent" $100 per …

Cuno And Congress: An Analysis Of Proposed Federal Legislation Authorizing State Economic Development Incentives, Walter Hellerstein

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If anything is clear about Cuno and the controversy the opinion has spawned, it is that Congress has the last word on the matter. Whether Congress will speak to the issues Cuno has raised is currently an open question, although in one narrow respect Congress already has. Broader legislation, however, has been introduced into Congress as the "Economic Development Act of 2005," and debate over the efficacy and wisdom of this proposal is as intense as the debate over the defensibility of Cuno itself. My purpose here is not to join that debate, although I am already on record as …

Federal Constitutional Restraints On Tax Competition Among The American States, Walter Hellerstein

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This article examines the judicially developed rules limiting interstate tax competition in the United States and the constitutional framework out of which they arise.

Jurisdiction To Tax Income And Consumption In The New Economy: A Theoretical And Comparative Perspective, Walter Hellerstein

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The collection of rules that falls under the rubric of "jurisdiction to tax" has aptly been described as "a body of law in search of a theory." Although this Article lays no claim to advancing such a theory, it does seek to provide a broad theoretical perspective on jurisdiction-to-tax issues raised by income and consumption taxation in the new economy. It is designed to suggest ways of thinking about the fundamental questions involved, questions that are often obscured by a preoccupation with the application of specific jurisdiction-to-tax rules to individualized fact patterns in particularized contexts. In short, this Article is …

Deconstructing The Debate Over State Taxation Of Electronic Commerce, Walter Hellerstein

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Elsewhere on these pages, the distinguished economist Charles McLure begins his contribution to the debate over taxation of electronic commerce by observing that “America is focusing on the wrong issues in debating the taxation of electronic commerce ....” He proceeds to provide a fundamental critique of the states' existing sales tax regimes and he lays out a roadmap for radical reform of the system that would, in the course of curing the basic defects in the existing state sales tax structure, incidentally resolve many of the issues that currently dominate the debate over taxing electronic commerce. I do not disagree …

State Taxation Of Electronic Commerce: Perspectives On Proposals For Change And Their Constitutionality, Kendall L. Houghton, Walter Hellerstein

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Over the past few years, an enormous amount of attention has been devoted to the problems raised by state taxation of electronic commerce, possible solutions to those problems, and, more recently, the question of whether there is a ‘problem‘ at all. We have both been, and continue to be, deeply involved in the debate over these issues -- a debate that has sometimes generated more heat than light. We view this forum as furnishing us an opportunity to take a step back from the fray and to offer our views not only on the critical issues that are dominating the …

The Law Of Sales Taxes In A Cyberspace Economy, Walter Hellerstein

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This article focuses on three questions of state sales’ tax:

(1) What is the basic structure of states’ sales tax laws and how do these laws apply to electronic commerce?

(2) What are the existing federal constitutional restraints on the states’ power to impose sales taxes and how do those restraints limit the states’ ability to apply their laws to electronic commerce?

(3) What are the restraints on Congress – to whom this commission’s recommendations will be directed – in legislating to limit or expand state taxing power, or otherwise enact rules governing taxation of electronic commerce?

State And Local Taxation Of Electronic Commerce: Reflections On The Emerging Issues, Walter Hellerstein

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When Ed Cohen honored me with the invitation to present the principal paper on state and local taxation of electronic commerce for this conference, I was pleased to accept, but with one caveat. Because most of my waking hours over the past year seem to have been consumed by the preparation of papers addressed to state taxation of electronic commerce, I warned Ed that much of what I might have to say would not be new -- at least to me. But a funny thing happened on the way to this forum. When I set about my task to prepare …

Commerce Clause Restraints On State Tax Incentives, Walter Hellerstein

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The states' provision of tax incentives designed to encourage economic development within their borders has long been a feature of the American legislative landscape. Today every state provides tax incentives as an inducement to local industrial location and expansion. Indeed, scarcely a day goes by without some state offering yet another tax incentive to spur economic development, often in an effort to attract a particular enterprise to the state.

The debate over the efficacy and wisdom of state tax and other business incentives is intense and important, as other articles in this Symposium plainly reveal. My purpose here, however, is …

Suspect Linkage: The Interplay Of State Taxing And Spending Measures In The Application Of Constitutional Antidiscrimination Rules, Dan T. Coenen, Walter Hellerstein

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This article examines an important and recurring question that courts frequently resolve, but rarely analyze: whether taxing and spending measures should be viewed together when a state imposes a nondiscriminatory tax but also affords relief to some taxpayers through government spending. The answer to this question will often determine whether the state's actions violate constitutional strictures against discriminatory taxation. The taxing measure and the spending measure will generally pass muster if viewed in isolation. After all, courts rarely invalidate nondiscriminatory taxing measures on constitutional grounds. And true government spending measures, if considered alone, plainly fall outside the reach of constitutional …

Suspect Linkage: The Interplay Of State Taxing And Spending Measures In The Application Of Constitutional Antidiscrimination Rules, Dan T. Coenen, Walter Hellerstein

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This article examines an important and recurring question that courts frequently resolve, but rarely analyze: whether taxing and spending measures should be viewed together when a state imposes a nondiscriminatory tax but also affords relief to some taxpayers through government spending. the answer to this question will often determine whether the state's actions violate constitutional strictures against discriminatory taxation. The taxing measure and the spending measure will generally pass muster if viewed in isolation. After all, courts rarely invalidate nondiscriminatory taxing measures on constitutional grounds. And true government spending measures, if considered alone, plainly fall outside the reach of constitutional …

Taxing Electronic Commerce: Preliminary Thoughts On Model Uniform Legislation, Walter Hellerstein

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This report on Taxing Electronic Commerce was presented at the symposium on multi-jurisdictional taxation of electronic commerce at Harvard University on April 5, 1997. This report describes the normative principles shared by most serious analyses of the problems raised by state taxation of electronic commerce. It then attempts to translate these principles into legal rules that could provide a model for uniform legislation in this area. Finally it addresses constitutional questions that will likely be encountered in any effort to implement such legislation.

State Taxation Of Electronic Commerce, Walter Hellerstein

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The coming of the information age has profound implications for state taxation as it does for just about everything else. The exponential growth and increasing commercialization of the Internet, along with the sweeping technological and regulatory changes that have reconfigured the telecommunications industry, pose a daunting challenge to the states’ traditional approaches to taxing business activity and the telecommunications system that facilitates it. State tax administrators and policymakers, alarmed at the prospect that their tax bases will disappear into cyberspace, are seeking means to accommodate their taxing regimes to the new technological environment. The business community, on the other hand, …

Taxation Of Telecommunications And Electronic Commerce, Walter Hellerstein

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No abstract provided.

Commerce Clause Restraints On State Business Development Incentives, Walter Hellerstein, Dan T. Coenen

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In this Article, we explore the ill-defined distinction between the constitutional carrot and the unconstitutional stick in state tax, subsidy, and related cases. Part I examines the restraints that the Commerce Clause imposes on state tax incentives. It canvasses the general principles limiting discriminatory state taxation, explores the Court's decisions addressing state tax incentives, and proposes a framework of analysis for adjudicating the validity of such incentives. Part I concludes by considering the constitutionality of a variety of state tax incentives within our suggested framework and also under alternative approaches that courts might utilize. Part II examines the restraints that …

Commerce Clause Restraints On State Taxation After Jefferson Lines, Walter Hellerstein, Michael J. Mcintyre, Richard D. Pomp

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The Supreme Court's 1977 decision in Complete Auto Transit, Inc. v. Brady signaled a paradigmatic shift in the Court's approach to state tax adjudication under the dormant Commerce Clause. In Complete Auto, the Court repudiated the formalistic school of interpretation that once had governed Commerce Clause analysis of state taxation because it bore ‘no relationship to economic realities.’ In its place, the Court embraced a decisional framework that ‘considered not the formal language of the tax statute but rather its practical effect.’ In furtherance of this objective, the Court suggested a four-part test to guide the constitutional analysis of state …

West Lynn Creamery And The Constitutionality Of State Tax Incentives, Walter Hellerstein

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One of the more perplexing questions that has surfaced from time to time in the state tax field is how a constitutionally benign tax incentive program designed to attract industry to a state is to be distinguished from an unconstitutionally discriminatory taxing scheme that “forecloses tax-neutral decisions” and “provides a direct commercial advantage to local business.” On one hand, the U.S. Supreme Court has expressed the view that its decisions do “not prevent the States from structuring their tax systems to encourage the growth and development of intrastate commerce and industry.” On the other hand, the Court has frequently invalidated …

State Taxation Of Corporate Income From Intangibles: Allied-Signal And Beyond, Walter Hellerstein

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If the field of state taxation has become somewhat of an academic backwater, it is not for want of issues warranting sustained scholarly attention. The Supreme Court alone has provided ample grist for the academic mill by handing down an extraordinary number of significant decisions delineating the federal constitutional restraints on state tax power. Among the state tax questions considered by the Court in recent years, none has figured so prominently and persistently in its deliberations as the states' power to tax the income of multijurisdictional corporations. In Allied-Signal, Inc. v. Director, Division of Taxation, the Court revisited the most …

State Taxation Of Nonresidents' Pension Income, Walter Hellerstein

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This article examines the issues raised by the efforts of some states to tax the pension income of their former residents and of the proposed congressional legislation to forbid such taxation. While there may be sound policy reasons for forbidding state taxation of nonresident pension income, they have yet to emerge clearly from the rhetoric that has thus far dominated the debate over the pension tax issue. The goal of the article is to examine the questions raised by the controversy over state taxation of nonresident pensions in the hope that dispassionate analysis of the problem may contribute to a …

Justice Scalia And The Commerce Clause: Reflections Of A State Tax Lawyer, Walter Hellerstein

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This paper considers Justice Scalia's substantive views of the restraints that the commerce clause imposes on state taxation. My purpose is to examine critically Justice Scalia's dormant or "negative" commerce clause analysis of the state tax issues on which he has opined and to draw from that examination some general conclusions about Justice Scalia's commerce clause jurisprudence.

The Finnigan Case: A Reply To Vogelenzang's Second Stage Apportionment Of Unitary Income, Walter Hellerstein, Jerome R. Hellerstein

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In this article J. Hellerstein and W. Hellerstein take issue with arguments made by Pierre Vogelenzang in a special report in Tax Notes that California’s second-stage apportionment of the income of a unitary business amounts to unconstitutional extraterritorial taxation. In the Finnigan case, the California State Board of Equalization held that sales made into California by a corporation that is not itself taxable in California, but is a member of a unitary group that is taxable there, are includable in the numerator of the state’s sales factor in apportioning income. The authors defend this result, arguing that the separate identity …

Preliminary Reflections On Mckesson And American Trucking Associations, Walter Hellerstein

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On June 4, 1990, the Supreme Court issued its long awaited decisions in McKesson Corp v. Division of Alcoholic Beverages and Tobacco and American Trucking Associations, Inc. v. Smith. Both cases raised the question of whether a taxpayer has a right to a refund of unconstitutional state taxes. This article analyzes these decisions separately and considers the implications of these decisions on future state tax litigation. The article has two purposes: first, to analyze the McKesson and American Trucking Association cases; and second, to consider their implications for future constitutional challenges to state taxes. The article concludes by stating …