The Unitary Tax Reconsidered

Abstract

How to determine the amount of income of essentially integrated multi-jurisdictional business entities that should be taxable by a particular state constitutes one of the most persistent issues in the state tax area. The need to resolve this issue is critical in light of states fiscal needs and the growing interdependence of the global economy. Unitary taxation constitutes a frequently employed approach to the issue. Unitary taxation, particularly its common variant of worldwide formula apportionment, has generated considerable controversy with regard to the appropriateness of its manner of apportionment and the impact it can have upon interstate and international commerce and relations. In this paper examination and analysis are made of: the major issues pertaining to the unitary tax and worldwide formula apportionment, the evolution of the unitary tax and the case law concerning it, as well as alternative courses of action for resolving the unitary tax controversy.