Double-Weighted Sales Factor for Alabama

Abstract

Congress and the U.S. Constitution impose no single apportionment method that all states must follow. The states have wide latitude in developing their apportionment formulas.

The apportionment of business income for state tax purposes is a major consideration in maintaining the fairness of business taxation and encouraging business investment. This paper looks at the issues involved in deciding whether Alabama should change its apportionment formula to one that doubleweights the sales factor.

Keywords: apportion, Alabama, income tax, sales factor, double weight

JEL Classification: E62, H22, H25, H71, K34