The Law Offices Of Ronny Buni

Can U.S. President’s Salary Be Taxed by States?

Posted on May 19th, 2010 by bunilaw

The Times published an interesting article that suggested President Obama’s salary could be taxed by states where he did official business in 2009. However, the President’s salary is probably exempt from taxation by the states.

In 1819, McCulloch v. Maryland began a long line of Supreme Court cases that established broad principles of federal immunity from state taxation under the “supremacy clause” of article VI of the Constitution. Following those principles, states probably cannot tax the salaries of elected officials in the conduct of United States business. The District of Columbia has an exemption for elected officials and their appointees who reside in the district, so the president’s salary would not be taxed there.

But Catherine Rampell’s article raises interesting questions. Is the law on this settled? Why does the District provide an exemption if the Constitution doesn’t let it tax anyway? Rampell reported that following historical practice the President plans to file a return in his resident state of Illinois. But why? If a constitutional exemption applies, there would be no reason to favor resident-based taxation over source-based taxation.

http://www.nytimes.com/2010/03/22/business/22tax.html?src=me&ref=business

Filed under: Tax Commentaries
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