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Implementing State Corporate Income Taxes in the Digital Age

McLure, Charles E. Jr.

Abstract:

This paper reviews issues in application of the state corporate income tax to income from electronic commerce. After examining potential arguments for the tax (benefit principle, ability -to-pay, and entitlement), problems inherent in the tax (complexity and distortions of locational decisions), and the basic structure of the tax (the choice between separate reporting and formula apportionment, the role of unitary combination, and the choice of apportionment factors), it discusses two key issues in implementation of corporate income taxes: nexus (jurisdiction to tax) and determination of the income to be taxed by a particular state that invokes nexus.

Citation

McLure, Charles E. Jr. (2000), Implementing State Corporate Income Taxes in the Digital Age, National Tax Journal, 53:4, pp. 1287-1305

DOI: dx.doi.org/10.17310/ntj.2000.4S2.02