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Posted by Seth on May 21, 2008, 1:59 pm
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>> The Supreme Court has upheld the ability of states to exempt their
>> own municipal bonds from taxation of interest while taxing those
>> of other states.
>>
>> http://www.nytimes.com/2008/05/19/business/apee-bizcourt.html
>
>I didn't find it surprising at all. When a state exempts its own bond
>interest from taxation, it benefits financially by encouraging more
>people to buy bonds at lower interest. If they were to exempt bond
>interest from other states, they would be losing financially. It's not
>considered discrimination if it's related to an actual cost/benefit to
>the state.
But if a state taxed corn imported from other states, and not corn
grown in itself, that would be unconstitutional discrimination, even
though it provides an actual cost/benefit to farmers in that state
(and thereby to the state itself by increasing collections of state
income tax).
Seth
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