Paul L. Caron

Tuesday, June 23, 2020

Shanske & Gamage: How To Interpret Public Law 86-272

Darien Shanske (UC-Davis) & David Gamage (Indiana), The Ordinary Diet of the Law: How to Interpret Public Law 86-272, 96 Tax Notes State 161 (Apr. 13, 2020):

This essay argues against expansive interpretations of Public Law 86-272 (the primary federal statute limiting state income taxation of out-of-state businesses). Specifically, this essay argues against interpretations of Public Law 86-272 that would broaden its coverage to protect business practices that differ from the practices that Congress specifically intended to protect at the time of the statute’s enactment.

None of the foregoing necessarily supports the details of the MTC’s approach. We will thus return to analyzing those details in a future article or articles. Our goal here has been to clear away the interpretive underbrush. P.L. 86-272 is a poorly drafted, 60-year-old statute that specifically protects 60-year-old business practices. Consequently, we have argued here that a proper, fair reading of the statute should not involve expanding its coverage to protect current business practices that differ from those Congress specifically meant to protect when enacting P.L. 86-272.

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