Pre–Emption: Federal Statutory Intervention in State Taxation

This paper examines the implications of federal statutory restrictions on state government taxing powers. Such pre-emption can prevent states from pursuing policies that are best adapted to their economic circumstances and objectives, inefficiently constraining decentralized state tax policymaking....

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Bibliographic Details
Published in:National tax journal 2007-09, Vol.60 (3), p.649-662
Main Author: Wildasin, David E.
Format: Article
Language:English
Subjects:
Consumption taxes
Corporate income taxes
Effects
Exclusive and concurrent legislative powers
Federalism
Income taxes
Intervention
Laws, regulations and rules
Personal income taxes
Preemption
Restrictions
Sales taxes
State income tax
State taxation
State taxes
Studies
Tax exemption
Tax policy
Taxation
Use taxes
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Summary:This paper examines the implications of federal statutory restrictions on state government taxing powers. Such pre-emption can prevent states from pursuing policies that are best adapted to their economic circumstances and objectives, inefficiently constraining decentralized state tax policymaking. States policy choices may, however, harm the efficient operation of the US federation as a whole; in such cases, the "visible hand" of federal pre-emption may lead to improved policy outcomes. Existing and proposed statutes that regulate state taxation of retail sales, retirement savings distributions, and corporation income illustrate the potential advantages and disadvantages of pre-emption.
ISSN:0028-0283
1944-7477
DOI:10.17310/ntj.2007.3.19