Court Considers Constitutionality of Maryland's Personal Income Tax -

On 11/12/14, the U.S. Supreme Court heard oral arguments on the constitutionality of Maryland's personal income tax in Comptroller of the Treasury of Maryland v. Wynne. Maryland's Acting Solicitor General William Brockman, Eric Feigin, Assistant to the U.S. Solicitor General, and Dominic Perella, attorney for the taxpayers, asked the Court to determine whether Maryland's failure to allow residents to take a credit against their state income tax liability for income taxes paid to other states on income earned in those states impermissibly discriminates against interstate commerce.

As this issue of the Journal went to press, it is not known when a decision will be handed down. Oral argument suggests that the Court may be able to sidestep the more general question of whether states are free to tax the worldwide income of their residents when it results in double taxation and narrowly rule on the validity of Maryland's regime that also imposes a complementary county income tax on nonresidents earning income in the state on the theory that the regime is "internally inconsistent" (i.e., a state cannot tax all income earned within the state's border, whether by resident or nonresident, and tax income earned by residents in other states).

Originally published in Journal of Multistate Taxation and Incentives (Thomson Reuters/Tax & Accounting),Volume 24, Number 10 - February 2015.