- FRC Report 110 Version
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- August 1, 2005 Create Date
- February 26, 2020 Last Updated
FRC Report 110, August 01, 2005, W. Bartley Hildreth, Matthew N. Murray, David L. Sjoquist
This report explores how interstate uniformity of state corporate income taxes has varied over time, the role played by the MTC, and how likely it is that uniformity will be achieved.
The Multistate Tax Commission (MTC) was established out of concern over the lack of uniformity in interstate taxation and the fear that in the absence of voluntary uniformity the federal government would dictate the nature of uniformity. This paper first considers why the MTC was formed and what it is and does. In the remainder of the paper we focus on the issue of tax uniformity. We consider what the MTC has accomplished and compare that to what might be expected of a voluntary compact. Finally, we consider alternative ways of achieving uniformity. In the
discussion of uniformity we focus on the state corporate income tax since state sales and use taxes are the subject of the paper by Swain and Hellerstein (2005). We want to make it clear that this paper is not an expose or an evaluation of the MTC. Rather, it is a discussion of the MTC and its role in achieving interstate tax uniformity of state corporate income tax systems. The rest of the paper proceeds as follows. In the next two sections we discuss the MTC, how it came to be and what it does. We also present a brief history of efforts to achieve uniformity of state corporate income taxes. In section 4 we discuss the case for interstate uniformity. We then turn to a discussion of what might be expected of an interstate compact, focusing on both “theory” and evidence from other compacts. In section 7 we present information about the degree of uniformity of state corporate income taxes that has been achieved since the formation of the MTC. In section 8, we discuss the advantages and disadvantages of alternative approaches to achieving uniformity, namely voluntary compacts versus federal mandates. Section 9 contains some concluding remarks.