Good Fences Make Good Neighbors: Business Income Taxes


Posted by Katie McAuliffe on Wednesday, September 14th, 2016, 1:26 PM PERMALINK

Today, Americans for Tax Reform sent an open letter to Congressmen in support of the Business Activity Tax Simplification Act (BATSA), HR 2584. ATR urges Congress to vote in favor of this bill to reiterate the fact that states do not have the authority to tax outside of their own borders, as well as to continue to take steps to strengthen the physical nexus standard.

 

The full letter can be read below, as well as here:

 

Dear Congressmen:

On behalf of American taxpayers, I write in support of the Business Activity Tax Simplification Act (BATSA), H.R 2584, which reiterates that states do not have the authority to tax outside of their own borders.

States are adopting policies that force new tax liability onto those with a mere “economic nexus.” Codified in many different forms across the country, the economic standard grants nebulous authority to force out-of-state, nonresidents to comply with a state’s tax code.

The gradual shift to economic nexus is an attempt by states to raise tax revenue beyond what their own economies and taxpayers can sustain. Economic nexus poses a direct threat to the principles of democracy and republican governance by the people, shifting the cost of government to non-residents.

BATSA promotes inter-state economic activity by eliminating the burden for businesses of having to comply with varying and complex state income tax laws. It establishes a clear physical presence standard for taxing multistate businesses engaged in cross-border transactions.

Congress has well-established Constitutional authority to protect against economically destructive state tax laws.

As Congress reiterates to wayward states that digital borders are no broader than physical borders, BATSA could not come at a more critical juncture. 

This legislation, introduced by Reps. Steve Chabot and Bobby Scott, passed the House Judiciary Committee with a reported vote of 18 yeas and 7 nays. 

I encourage Congress to avoid attempts to weaken the physical nexus standard, and to continue taking steps that strengthen physical nexus by passing the Business Activity Tax Simplification Act.

If you should have any questions regarding this issue please contact me, or Katie McAuliffe at kmcauliffe@atr.org or 202-785-0266.

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