State Corporate Income Taxes: The Illogical Deduction for Income Taxes Paid to Other StatesTax Law Review (1987)
Forty percent of states with a corporate income tax permit corporations to deduct income taxes paid to other states. This article argues that the state income tax deduction for taxes paid to others states violates tax logic by allowing a cost of generating tax-exempt income. Part I of the article introduces the issue, briefly explaining the illogical state income tax deduction for income taxes paid to other states. Part II analyzes how states calculate the amount of income subject to their jurisdiction, and the inequities that result from the deduction for income taxes paid to sister states. This part further explains how this deduction favors multistate corporations over intrastate corporations. Part III concludes the article by urging all states to eliminate the deduction for income taxes paid to other states.
Citation InformationRichard D. Pomp, State Corporate Income Taxes: The Illogical Deduction for Income Taxes Paid to Other States, 42 Tax L. Rev. 419 (1987).