Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/280519 
Year of Publication: 
2014
Series/Report no.: 
AEI Economics Working Paper No. 2014-07
Publisher: 
American Enterprise Institute (AEI), Washington, DC
Abstract: 
Although the U.S. Supreme Court has long held that the Commerce Clause of the U.S. Constitution prohibits state taxes that discriminate against interstate commerce, it has failed to provide a clear explanation of which taxes are discriminatory. In this paper, we provide an economic analysis that distinguishes neutral and discriminatory state taxation of interstate commerce. We show that state taxes discriminate against interstate commerce if the combined tax burden on inbound and outbound transactions exceeds the tax on intrastate transactions. The analysis reveals that current state individual income tax systems systematically discriminate against interstate commerce.
Subjects: 
tax reform
Interstate commerce
JEL: 
A
Document Type: 
Working Paper

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