Thomson Reuters distinguished WG&L-brand tax author Walter Hellerstein testified before the U.S. Senate Finance Committee hearing on “Tax Reform: What it Means for State and Local Tax and Fiscal Policy” in Washington, D.C. on Wednesday.

In light of U.S. current tax reform discussions and state and local budget deficits, the committee discussed the need for proper coordination between federal and state governments to create rules that will help states balance their budgets and that will protect taxpayers from multiple taxes and needless complexity.

Mr. Hellerstein gave testimony on the implications of federal tax reform for state taxation, particularly addressing the role of Congress in authorizing or limiting state taxation of interstate commerce. Mr. Hellerstein provided a detailed history of federal-state tax coordination with:

• Vertical coordination (between concurrent federal and state tax regimes) of wealth transfers and of income
• Horizontal coordination (among state tax regimes) with federal efforts to harmonize or restrain state income, excise, and property taxes

He also addressed pending congressional proposals for federal-state tax coordination based on past mixed results.

“The historical record of federal-state tax coordination provides important lessons regarding the risks and rewards of such coordination and, consequently, guidance for evaluating pending and future initiatives for such coordination,” said Mr. Hellerstein. “If there is any overarching conclusion that one can draw from this overview of federal-state tax coordination, it may simply be that Congress should keep in mind the admonition of the Hippocratic Oath – “first do no harm” – in considering proposals for federal legislation that affect state taxation.”

Mr. Hellerstein is the Francis Shackelford Professor of Taxation and Distinguished Research Professor at the University of Georgia School of Law. He is also a consultant to the Organization for Economic Cooperation and Development (OECD). Mr. Hellerstein has been involved in numerous state tax cases before the United States Supreme Court and has also been involved in issues relating to state taxation of electronic commerce. He was a member of the Steering Committee of the National Tax Association’s Telecommunications and Electronic Commerce Tax Project and has served as a consultant to the United Nations on e-commerce tax issues.

Mr. Hellerstein is the co-author of Thomson Reuters WG&L treatise “State Taxation.” State Taxation offers analysis on tax compliance and planning issues that face state tax practitioners. The treatise covers all of the leading-edge topics in the expanding field of state taxation. 

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