The Taxman Cometh, Twice

Abstract Businessman in Tax Ball and Chain

Among the cases teed up for the Supreme Court’s current Term is Comptroller v. Wynne, arising over the state taxation of personal income earned and taxed in other states (and therefore, in interstate commerce). The vast majority of state and local jurisdictions credit residents’ taxes paid to “foreign” jurisdictions, meaning other states. Maryland credits such taxes against state but not against local income taxes (which are collected by the state). Through an S-corporation, the Wynnes (Maryland residents) earned a ton of income in thirty-plus states and paid income taxes there—and then again paid the local tax on that income, without receiving a credit. The Maryland Court of Appeals deemed the arrangement unconstitutional. The Comptroller asked for and received cert. Briefs etc. can be found here.

Boring? Maybe (unless you live in Maryland and earn income elsewhere). But there are reasons to pay attention.

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