MultiTax Commission

An intergovernmental state tax agency whose mission is to promote uniform and consistent tax policy and administration among the states, assist taxpayers in achieving compliance with existing tax laws, and advocate for state and local sovereignty in the development of tax policy.

TCJA Effects on State Taxes

A tale article

In this article recently published in Tax Notes State, MTC Senior Counsel Bruce Fort argues that the states need to re-evaluate their policies regarding conformity to the TCJA to ensure that domestic and multinational companies are being taxed on an equal basis. The states’ allowance of full or substantial deductions for GILTI and Subpart F income amounts have reflected state policies towards foreign dividend taxation, but GILTI and Subpart F income represents different types of economic activity. State policies have also been affected by a misconception of the scope of the 1992 Kraft foreign commerce clause discrimination case. Kraft has no application to state taxation of either Subpart F income or GILTI, Fort argues. By excluding those amounts from the state tax base while conforming to the federal deduction for FDII, states may be taxing multinational companies at a far lower effective state tax rate than their wholly domestic counterparts. Six years after passage of the TCJA, it’s time for states to evaluate their conformity choices to ensure a level playing field.

Click here to read the article, originally published in the June 17, 2024 edition of the State Tax Note, Volume 112, Number 12. 


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