The highest court in West Virginia has rebuffed an attempt to further restrict the right of states to tax the profits of multi-state corporations.
As explained in a new ITEP paper, the U.S. Supreme Court has already restricted the ability of states to impose sales taxes on remote sales by out-of-state companies, and Congress passed a law back in 1959 that restricts states' ability to tax corporate income generated by remote sales of goods into a state. In West Virginia tax Commissioner v. MBNA America Bank, MBNA argued that their profits in West Virginia "its gross receipts in the state exceeded $10 million during one of the years in question" could not be taxed under the U.S. Constitution because MBNA had no physical presence in the state.
Fortunately, the court found that the amount of business MBNA has done in West Virginia amounts to "economic presence" in the state that benefits from the services provided by West Virginia ... and that justifies the imposition of the state corporate income tax. Other state courts should follow West Virginia's lead in this area of jurisprudence.