H.R.427 - Interstate Commerce Simplification Act of 2025 (119th Congress)
Summary
The Interstate Commerce Simplification Act of 2025 (H.R. 427) aims to amend Public Law 86-272, expanding the definition of "solicitation of orders" to include activities that facilitate order solicitation, even if those activities have independent business value. This expansion seeks to further limit states' ability to tax businesses whose activities within the state are primarily related to soliciting orders. The bill was introduced in the House of Representatives and referred to the Committee on the Judiciary.
Expected Effects
The likely effect of this bill is a reduction in state tax revenue from interstate commerce. Businesses engaging in activities that support order solicitation, but also have independent value, may be exempt from state taxation. This could lead to increased business activity across state lines but potentially strain state budgets.
Potential Benefits
- Simplifies interstate commerce for businesses, reducing compliance costs.
- May encourage businesses to expand their operations across state lines.
- Could lead to lower prices for consumers due to reduced tax burdens on businesses.
- Potentially fosters innovation by reducing the complexity of interstate business operations.
- May create a more level playing field for businesses operating in multiple states.
Most Benefited Areas:
Potential Disadvantages
- Reduces state tax revenue, potentially impacting funding for essential public services.
- Could create an unfair advantage for large, multi-state corporations over smaller, local businesses.
- May lead to increased complexity in defining "solicitation of orders," resulting in litigation.
- Could incentivize businesses to structure their operations to avoid state taxes.
- Potentially shifts the tax burden from businesses to individual taxpayers or other revenue sources.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's alignment with the US Constitution centers on the Commerce Clause (Article I, Section 8, Clause 3), which grants Congress the power to regulate commerce among the states. By further defining and limiting state taxation on interstate commerce, the bill seeks to promote free trade among the states, which aligns with the spirit of the Commerce Clause. However, the Tenth Amendment reserves powers not delegated to the federal government to the states, including the power to tax. The bill's impact on state revenue and autonomy must be carefully considered in light of this amendment.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).