Multistate expert urges Vermont to consider taxing full NCTI (formerly GILTI) with apportionment
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Summary
A Multistate Tax Commission witness recommended Vermont consider including 100% of NCTI in its tax base while using apportionment to avoid overtaxing foreign-source income; the tax department cautioned that such a move would carry revenue and administrative trade-offs.
A witness from the Multistate Tax Commission recommended that Vermont examine whether to include the full amount of NCTI (the HR1 successor to GILTI) in its state tax base while continuing to use apportionment formulas to avoid taxing income earned outside Vermont.
"What I would propose in my own name...is that you consider eliminating the IRC 250 deduction entirely and bringing in 100% of NCTI," Bruce Ford said, arguing that bringing the full measure into the state base while allowing factor representation would conform to the new federal attribution approach without overtaxing extraterritorial income.
Ford also cited national data showing that the bulk of GILTI-like tax receipts flow from very large multinationals and that smaller Vermont businesses are largely unaffected by these provisions. Tax department witnesses and other panelists agreed the policy choice involves balancing revenue implications against compliance capacity; Rebecca Samraff noted that states have taken varied approaches and the administrative burden of targeted decoupling can be substantial.
No statutory proposal was made during the hearing; committee members said they would seek more detailed fiscal modeling and written testimony before making policy or drafting decisions.