State Corporate Income Taxes: The Illogical Deduction for Income Taxes Paid to Other States

Richard D. Pomp, State Corporate Income Taxes: The Illogical Deduction for Income Taxes Paid to Other States, 42 Tax L. Rev. 419 (1987)

14 Pages Posted: 15 Jul 2017 Last revised: 15 Jun 2022

See all articles by Richard Pomp

Richard Pomp

University of Connecticut - School of Law; Independent

Date Written: 1987

Abstract

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.

Keywords: tax, law, tax law, taxation, SALT, corporate income tax, state tax, interstate, deduction, policy, multistate corporations, intrastate corporations

JEL Classification: k34, h20, h21, h25, h70, h71

Suggested Citation

Pomp, Richard, State Corporate Income Taxes: The Illogical Deduction for Income Taxes Paid to Other States (1987). Richard D. Pomp, State Corporate Income Taxes: The Illogical Deduction for Income Taxes Paid to Other States, 42 Tax L. Rev. 419 (1987), Available at SSRN: https://ssrn.com/abstract=2999101

Richard Pomp (Contact Author)

University of Connecticut - School of Law ( email )

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United States
860-570-5251 (Phone)

HOME PAGE: http://www.law.uconn.edu/faculty/rpomp/

Independent ( email )

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