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Title:State corporation income taxation: An economic perspective on Nexus PDF Logo
Authors:Wildasin, David E.
Issue Date:2010
Series/Report no.:CESifo working paper: Public Finance 3218
Abstract:Acting in the interest of their residents, within limits imposed by Federal statute and by the Constitution, states have incentives to impose taxes on the profits of corporations owned by nonresidents. 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.
JEL:H25
H71
K34
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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