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Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, March 19, 2007

Beale on Davis and the Constitutionality of Tax Exemptions for Home State Bonds

News_quarterly_2The ABA Tax Section has published the 2007 Winter issue of the NewsQuarterly.  It features an interesting Point & Counterpoint on The Constitutionality of Tax Exemptions for Home State Bonds under the Dormant Commerce Clause, introduced by Christopher M. Pietruszkiewicz (LSU):

The income tax system in Kentucky exempted interest on bonds issued by the Commonwealth of Kentucky but taxed interest on bonds from other states. In Davis v. Department of Revenue (blogged here), a Kentucky court determined that the state’s disparate tax treatment of bond interest discriminated against interstate commerce. While the decision is limited to the taxation of bonds under the Kentucky income tax system, its rationale may have a much broader application in increasingly competitive financial markets and raises questions about the ability of states to self-create tax incentives. In this article, Linda Beale [Wayne State] argues that the home-state interest exemption should be viewed as constitutional and not violative of the dormant Commerce Clause. The NewsQuarterly encourages readers to submit responses or comments to this essay, which may be published in a subsequent issue.

http://taxprof.typepad.com/taxprof_blog/2007/03/beale_on_davis_.html

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