Coalition Letter in Support of the “Business Activity Tax Simplification Act,” H.R. 3063

By SBE Council at 5 June, 2019, 12:34 pm

Dear Members of Congress:

As some states attempt to use “economic nexus” theories to expand their tax base, we, the undersigned organizations, write in support of the Business Activity Tax Simplification Act (BATSA), H.R. 3063, introduced by Representative Bobby Scott and Representative Steve Chabot.

States are adopting policies that force new tax liability onto those with a mere economic nexus standard that grants states nebulous authority to force out-of-state, nonresidents to comply with a state’s tax code other than their home state.

These efforts are sure to increase dramatically in light of the U.S. Supreme Court decision in South Dakota v. Wayfair, Inc. Because of the Court’s 1992 decision in Quill Corp. v. North Dakota, many states did not pursue business income tax collection on companies without physical presence. Now that there is a nexus for collecting taxes on remote sales, some states believe that there is also a nexus for states to collect business income.

Left unchecked, this unwarranted expansion of states’ power to impose business activity taxes on companies that do business across state lines will have a chilling effect on the entire economy through increased tax burdens and compliance costs.

BATSA would set a uniform standard for state assessment of income and similar taxes against non-resident companies. Under the legislation, states would only be able to impose business activity taxes on companies that have a meaningful physical presence in that state. A state could not impose business activity taxes on companies for merely soliciting sales there; rather, they could only levy these taxes on businesses that have employees or that own or lease property in that state.

BATSA would apply to all business activities taxes, which include corporate income taxes, gross receipts taxes, gross profits taxes and single business taxes.

Congress has well-established Constitutional authority to protect against destructive state tax laws. It should use this authority to shield citizens and companies from overreaching states’ attempts to tax out-of-state businesses.

Regards,

Grover G. Norquist

President

Americans for Tax Reform

Phil Kerpen

President

American Commitment

Steve Pociask

President & CEO

The American Consumer Institute

Center for Citizen Research

Lisa B. Nelson

CEO

ALEC Action

Ryan Ellis

President

Center for a Free Economy

Andrew F. Quinlan

President

Center for Freedom & Prosperity

Thomas A. Schatz

President

Council for Citizens

Against Government Waste

Katie McAuliffe

Executive Director

Digital Liberty

Adam Brandon

President

FreedomWorks

Tim Chapman

Executive Director

Heritage Action

Bartlett Cleland

Executive Director

Innovation Economy Alliance

Pete Sepp

President

National Taxpayer Union

Karen Kerrigan

President & CEO

Small Business & Entrepreneurship Council

David Williams

President

Taxpayer Protection Alliance