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SALT discrimination under the ‘affirmative’ Commerce Clause


The principle of nondiscrimination plays a pivotal role in the field of state and local taxation. Discriminatory taxes are said to deter cross-border activity, distort competitive neutrality, and hinder economic efficiency by placing a thumb on the scale of the competitive marketplace. Recognizing these issues, federal and state governments have prohibited discrimination since the founding of our country.

Despite the many barriers to tax discrimination, state and local governments often are unable to restrain themselves from pursuing additional revenue or favoring some businesses over others. Over the last century, state and local governments have continuously been found to have engaged in impermissible tax favoritism or punishment. One avenue of curtailing that behavior is Congress’ affirmative grant of legislative authority to regulate interstate commerce under the Commerce Clause of the US Constitution.

In this installment of A Pinch of SALT for Tax Notes State, Eversheds Sutherland attorneys Maria Todorova, Eric Tresh and Fahad Mithavayani focus on state and local tax discrimination under the affirmative Commerce Clause, which has played a critical role in harnessing state and local taxes that impermissibly target inherently interstate industries and activities.

Read the full article here.


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