I have been asked to advise upon the question whether the States have power to impose income tax on persons earning income in more than one State at rates which would be applicable if the whole of their income were earned within the State.

The matter has to be looked at from two points of view, firstly, from that of the State in which the person is resident, and secondly from that of the State in which he is not resident.

Dealing with the first case, I think it is clear that the State has power to frame its taxation laws in such a way that it may impose taxation upon the income earned within the State at the rate which would be applicable if the whole of the person’s income were earned within that State. As the taxpayer is resident in the State, there would be no legal or practical difficulty in requiring him to supply information with regard to the income earned by him in other States as well as with regard to that earned in the State in which he is resident. The legislative powers of the State are generally sufficiently wide to require such information to be supplied.

Dealing now with the second case, I have no doubt that a State in which a non-resident persons earns income is entitled to impose taxation at the rate which would be applicable if the person earned the whole of his income in that State. Co-operation between the States would make it possible for each State to ascertain the amount of income earned within the State by non-residents. There is, of course, the possibility of a practical difficulty occurring in the collection of the tax by the State in which the non-resident person earns income, if he has no agent operating in that State. I see, however, no legal objection to the imposition of the tax by the State in which the income is earned.

[Vol. 20, p. 47]