Misalignment of Substantive and Enforcement Tax Jurisdiction in a Mobile Economy: Causes and Strategies for Realignment
John A. Swain
University of Arizona - James E. Rogers College of Law
July 27, 2010
National Tax Journal, Forthcoming
Arizona Legal Studies Discussion Paper No. 10-23
When a state asserts substantive jurisdiction over the subject matter of a tax, the state generally should also have enforcement jurisdiction over a person who can remit the tax. In the American subnational system, transaction costs, tax assignments, and legal barriers are the major causes of misalignment between substantive and enforcement jurisdiction. Strategies for achieving greater jurisdictional alignment include (1) reducing administrative and compliance cost through reform vehicles such as the Streamlined Sales Tax, (2) adopting simplified compliance regimes for foreign taxpayers, (3) repealing the physical-presence test and P.L. 86-272, and (4) “reverse engineering” substantive jurisdiction rules in recognition of existing limits on enforcement capabilities.
Number of Pages in PDF File: 21
Keywords: state and local taxation, nexus, jurisdiction
JEL Classification: H71, H77Accepted Paper Series
Date posted: July 28, 2010
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