This morning in Maryland v. Wynne, the U.S. Supreme Court upheld a ruling striking down a Maryland taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. law that “has the effect of double-taxing income residents earn in other states.”
This is a broad victory for taxpayers. Today’s 5-4 decision upholds what should be noncontroversial: state tax powers do not extend to harming interstate commerce by levying multiple taxes on it. This is important not just for one Maryland business, but for anyone who does business in more than one state, travels in more than one state, or lives in one state and works in another. The court also held that these protections apply not only to businesses, but to individuals as well.
As explained in the Tax Foundation’s brief in the case, state tax practitioners knew these were the rules even though the Supreme Court never explicitly said so. Today, the Supreme Court explicitly said so. Anyone who thought that a state’s tax power extends to all income earned by its residents anywhere in the world, now knows they were wrong.
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