The global reach and effectiveness of Tax Executives Institute's advocacy efforts has been in full display this spring, according to TEI President David L. Bernard. From filing a "friend of the court" brief with the U.S. Supreme Court and far-reaching submissions with the European Commission, to engaging in a budget scrum in Canada over interest deductibility, TEI has been in the forefront of key tax policy and administrative developments around the word. Mr. Bernard observed, "The submissions reprinted in this issue of The Tax Executive demonstrate both the depth and scope of TEI's technical committees."
TEI to Supreme Court: Clarify Nexus Standard
On May 8, TEI filed a brief amicus curiae with the Supreme Court of the United States in a case involving whether states may constitutionally tax companies that have no physical presence in the taxing state. The Institute's brief supports a request by MBNA that the high court review a West Virginia decision rebuffing the credit card issuer's challenge to West Virginia's attempt to impose an income tax even though the out-of-state corporation had no physical presence within West Virginia. TEI argued the absence of a bright-line rule requiring an enterprise's physical presence before income-based taxes can be imposed unconstitutionally burdens on interstate commerce.
Mr. Bernard commented, "Under West Virginia's expansive view, nearly every company selling goods or services from anywhere in the world into West Virginia might be subject to tax. TEI has asked the Supreme Court to establish a bright-line Commerce Clause nexus standard limiting states' taxing power."
For more on the amicus brief, see the separate story in this issue. TEI's brief is reprinted in this issue, beginning on page 296.
Interest Deductibility--Canadian Proposal Would Limit Multinational Financing
The Canadian Government's March 19, 2007, budget message contained a proposal to restrict significantly the deductibility of interest expense on debt incurred directly or indirectly to acquire shares or indebtedness of foreign affiliates. The unexpected proposal prompted an immediate response by TEL whose Canadian Income Tax Committee analyzed the proposal and met with representatives of the Department of Finance in early May 9. Following that meeting, the Institute submitted a letter to Minister of Finance James Flaherty urging that the proposal be withdrawn. Shortly thereafter, the government announced significant ameliorative...