U.S. tax right upheld

Press, 30 June 1983, Page 7

U.S. tax right upheld

NZPA Washington The United States Supreme Court has overridden foreign objections and upheld the right of American states to collect hundreds of millions of dollars by basing taxes paid by multi-national corporations on the companies’ world-wide income. The Court ruled that California did not violate the American Constitution by computing the tax on a portion of each corporation’s income from foreign operations. The Court over-rode objections of some foreign countries that the tax methods violated international trade agreements, and it rejected assertions that the method of comput-

ing tax could cause a firm to be taxed twice, that is, pay double tax — in the United States and abroad — on the same income.

The ruling means that multi-national corporations will have to pay SUS62S million additionally in annual taxes to individual states, according to the Multistate Tax Commission, an organisation that represents 20 states.

Container Corporation of America, which was in the dispute with California, failed to prove that the tax levied by the state was too much in relation to the amount of business the company transacts within the state, ruled the Court.