Federal statues do not preempt GILTI taxes---empirics disprove SC action

The federal government has decided to encourage capital investment by permitting taxpayers to depreciate capital assets. Can a state really ta4ke advantage of this choice and tax capital investments more heavily by slowing down depreciation? Would some kind of conflict preemption not come into play? As I have argued at length elsewhere,102 I think the answer is no. Ordinary federal tax statutes do not have the effect of preempting state tax law because such a rule would dramatically undermine the revenue power of the states. The federal choice to encourage capital investment is a very expensive one; it would be extraordinary if that choice now meant that all states also had to permit full expensing of capital equipment. In fact, the Supreme Court has permitted states leeway in the area of international taxation. The states did not and do not approach the income of MNCs in the same way as the federal government. Among other differences, the federal government, consistent with international norms and treaties, uses foreign tax credits and a methodology called transfer pricing to divide the income of MNCs. Not so the states; they use apportionment. Taxpayers argued that the states were not free to deviate from the federal government in this way. However, the Supreme Court held clearly, twice, that the states are not implicitly bound to follow the federal government even in a context where the taxpayers could plausibly argue that the harm from nonconformity had reverberations beyond other state-federal differences.103 And this makes sense. Given the relative import of MNCs, requiring states to follow the federal lead “only” as to their international operations would amount to a serious limitation on state revenue power.10