A Constitutional Test For State Taxes

It has been seven years, and the state tax in question already has been changed. But on Mar. 28, the U.S. Supreme Court will hear arguments in what amounts to a key test of states' authority to tax income beyond their borders. Britain's Barclays Bank claims that California violated the Constitution in 1977 by taxing a portion of the bank's worldwide income instead of the portion generated by its California subsidiary. Barclays says that the Constitution prohibits states from taxing foreign commerce. California argues that it could levy the tax as long as Congress doesn't specifically prohibit it. The Clinton Administration Justice Dept. supports California, a key state for the President's reelection.

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