Chapter 1, Problem 1P

Suppose a state imposes a higher tax on out-of-state companies doing business in the state than it imposes on in-state companies.  Is this a violation of the equal protection clause if the only reason for the tax is to protect the local firms from out-of-state competition?

Why would a company have a physical headquarters in one state but file for incorporation in another state? O Employees pay income taxes based on the rates of the chartering state, so a company may choose to charter in a state with lower income taxes. O Customers trust large companies, so a company may choose to charter in a separate state to give the appearance of being a national company. O Interstate litigation is very complex, so a company may choose to charter in a separate state to make it more difficult to sue the company. States vary in the laws that govern corporations, so a company may choose to charter in a state with more favorable corporate laws.

Question: Suppose a state imposes a higher tax on out-of-state companies doing business in the state than it imposes clause if the only reason for the tax is to protect the local firms from out-of-state competition? in-state companies. Is this a violation of the equal protection   Explain your answer thouroughly and in a manner that a person with no prior knowledge of the situation would understand it fully.   For this I need more details all I can answer is .....Yes. The tax would limit the liberty of some persons (out-of-state businesses), so it is subject to a review under the equal protection clause. Protecting local businesses from out-of-state competition is not a legitimate government objective. Thus, such a tax would violate the equal protection clause.