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Bipartisan Legislation is Needed to Prevent “Arbitrary” Taxation


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The National Association of Manufacturers expressed support for bipartisan legislation to prevent arbitrary state taxation of interstate commerce - the Business Activity Tax Simplification Act – introduced today by Rep. Rick Boucher (D-VA) and Rep. Bob Goodlatte (R-VA).


“With manufacturers facing strong headwinds during the current economic downturn, the last thing companies need is to be hit by random and unfair state taxes,” said Monica McGuire, the NAM’s senior policy director for taxation.


“By establishing a bright-line physical presence test of when a state can tax an out-of-state company, the legislation prevents arbitrary taxation without jeopardizing the ability of states to legitimately tax businesses with in-state operations,” she said.


Business activity taxes include state income, franchise and gross receipts taxes assessed on out-of-state companies engaged in interstate commerce.


“The current climate of uncertainty about the imposition of business activity taxes inhibits business expansion and innovation,” McGuire said. “Companies of all sizes will benefit from the certainty of a uniform rule on state taxation."


The Senate companion bill (S. 1726), introduced in 2007 by Sen. Charles Schumer (D-NY) and Sen. Mike Crapo (R-ID), was referred to the Senate Finance Committee.

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