Understanding uniformity and diversity in state corporate income taxes.

The italicized phrase refers to the shift from origin to destination as the basis for the sales factor that was then occurring. The trend to increasing the weight on sales (at destination) and reducing that on the origin-based factors of payroll and profits is, of course, totally consistent with this assessment.

(18) I proposed this in McLure (1997, 2000) and the Multistate Tax Commission has endorsed it; see MTC (2003).

Almost 50 years ago Studenski (1960, p. 1135) noted:

... [T]ax administrators ... do not set ... a minimum size for a

company or a minimum amount of company sales in the state below

which they will not go in applying the tax to an out-of-state

company. In addition, none of the states ... has so far in its

statutes exempted out-of-state companies of certain size or ones

having sales in the state below a certain amount...."

(19) Stockham Valves is less clear-cut, as the record is less complete. But what if Georgia had also adopted the nexus rule described earlier and the taxpayer's economic activity fell either well above or well below the threshold test for jurisdiction to tax?

(20) U.S. Steel Corp. et al. v. Multistate Tax Commission, 434 U.S. 452 (1978). The Court ruled that the Compact did not expand the powers of the states at the expense of the federal government and was not a compact in the sense of the Compact Clause of the U.S. Constitution.

(21) Iowa's statute had included the single-factor sales formula since its original enactment in 1934. Moorman Manufacturing Co. v. Bair, 437 U.S. 267 (1978) at 282 (Blackmun, J., dissenting).

(22) Moorman Manufacturing Co. v. Bair, 437 U.S. 267 (1978) Moorman also unsuccessfully argued that the Iowa formula violated the Due Process Clause. It will be useful to focus on the challenge under the Commerce Clause, which was based on the inconsistency between the apportionment formulas used by Iowa and Illinois.

(23) The Federation of Tax Administrators provides current information on apportionment formulas and tax rates; see http://www.taxadmin.org/.

(24) Anand and Sansing (2000) suggest that states that export natural resources will not make the shift.

(25) As an indication of the degree of this discontent, the U.S. Supreme Court, in subsequently ruling that states could include foreign members of foreign multinationals in combined groups, noted that "a battalion of foreign governments ... has marched to Barclay's aid, deploring worldwide combined reporting in diplomatic notes, amicus briefs, and even retaliatory legislation." Barclays Bank v. Franchise Tax Board, 512 U.S. 298 (1994) at 320. For a short overview of this history, see Weiner (2006, p. 6).

(26) General Motors Corp. v. District of Columbia, 380 US 553 (1965).

(27) This question is based on the title of McLure (2005).

(28) In a letter to Charles Trost, Chair of the NCCUSL drafting committee to revise UDITPA, released on January 10, 2008, Douglas Lindholm, President and Executive Director of the Council of State Governments (COST), which he characterizes as "an independent membership of over 600 major multistate corporations engaged in interstate and international business," notes in urging NCCUSL to table its project to revise UDITPA: "... it is highly unlikely that the myriad of concerns that states and businesses will undoubtedly raise throughout the process can be satisfactorily reconciled by amendments to UDITPA."

(29) In his letter to Charles Trost, Lindholm (2008) writes, "[I]t appears inevitable that the scope of the current NCCUSL project would be broadened beyond the original UDITPA to include "third-rail" type topics such as mandatory unitary combined reporting and nexus standards. The inclusion of these topics further decreases the likelihood that the project would result in a product that could ever be uniformly adopted by the states."