What is an Apportionment?

This process is especially important for corporations operating in multiple regions as it directly affects their financial statements and tax liabilities. In the context of the law, U.S. congressmen are apportioned to the House of Representatives according to their state’s population. Apportionment can also refer to liability being distributed to a number of individuals or groups in a court case. If you have a whole pie and there are four people, you would cut it into fourths. Fundamentally, the representation of a population in the thousands or millions by a reasonable size, thus accountable governing body involves arithmetic that will not be exact.

State-Specific Variations and Sourcing Rules

After adding up the amounts — say 50% of property and 50% of payroll, plus the 40% of sales — you divide this number by 4. Other types of companies, such as S (Subchapter) corporations, limited liability companies (LLCs), and partnerships usually do not need to pay corporate income tax. Instead, they are subject to “pass-through taxation”; the individuals involved in the business pay state tax on their income from the business, while the business doesn’t pay separately.

Financial institutions have business models centered on loans and deposits, not tangible goods. Special rules for this industry replace standard factors with metrics relevant to banking. These can include interest from loans secured by in-state property, receipts from in-state credit card customers, and the volume of deposits in local branches. These factors tie the institution’s income to the location of its customers and assets. A perfectly apportioned governing body would assist but does not ensure good representation; voters who did not vote for their district’s winner might have no representative who is disposed to voice their opinion in the governing body.

That stipulation was not continued after 1912, and by the 1960s, the districts within some states differed greatly in size. These disparities were caused in some cases by gerrymandering, which is the process of drawing boundaries for election districts so as to give one party a greater political advantage. Large disparities led a group of urban Tennessee voters to bring suit against their state’s electoral commission on the ground that the apportionment of the legislature was unfair. The Supreme Court’s March 1962 decision in favor of the voters in baker v. carr, 369 U.S. 186, 82 S. 2d 663, established the rule that a citizen may bring suit against legislative malapportionment when it deprives that citizen of equal protection under the law as guaranteed by the Fourteenth Amendment. 1432 (1946), the Court had refused to accept jurisdiction in apportionment cases.

Sales of tangible property are sourced to the destination of the sale, but accounting for the sale of services is more complex. Some of the corporate income-taxing what is apportionment states emphasize, in varying ways, the location where a service’s benefit is received. This is known as market or benefit sourcing and contrasts with sourcing rules that emphasize the location where a greater proportion of a company’s income-producing activity takes place.

Companies that do business in multiple states face the challenge of tracking corporate income tax laws in multiple — perhaps many — places. Staying in compliance across the board is extremely difficult, if not impossible, especially for small teams without a lot of bandwidth to track every detail of state tax law. In the absence of specific instructions in a will or trust, state laws often dictate how these taxes are apportioned. Some states may follow a rule where taxes are paid from the residuary estate, meaning the remaining assets after specific gifts and debts are settled. Other states have adopted equitable apportionment principles, which require each beneficiary to pay a proportional share of the estate taxes generated by their inheritance. The Uniform Estate Tax Apportionment Act provides a legal framework for how estate taxes should be shared among beneficiaries, aiming for a fair distribution based on each beneficiary’s interest in the overall estate.

• Rented property is often valued by multiplying the net annual rental rate by eight to create a value comparable to owned property.
• They work together to ensure political power is distributed based on population.
• With tools such as these, even the smallest tax team can stay on top of everything it needs to know to manage state income tax.
• Because we’ve adopted a system of “zero-sum apportionment,” it means that in order for residents of any state to gain representation, residents of other states have to lose.
• Many states have modified the traditional, equally weighted three-factor formula, often due to economic policies.

The process is generally handled by state legislatures, though some states use independent or bipartisan commissions to draw the new maps. Apportionment and redistricting are two distinct but interconnected processes fundamental to representative government in the United States. They work together to ensure political power is distributed based on population.

What is apportionment?

• Following the decennial census, congressional seats get reassigned depending on population gains and losses in states since the last census.
• Under that statute (section 2) all rents, annuities, dividends and other periodical payments in the nature of income are to be considered as accruing from day to day and to be apportionable in respect of time accordingly.
• The payroll factor measures a company’s workforce within a state based on the total compensation paid to employees, including wages, salaries, and commissions.
• Reapportionment sets into motion a cascade of changes that have significant implications for democratic representation.
• 2d 45 (1968), that if county, city, and town governments elect their representatives from individual districts, the districts must be substantially equal in population.

Although the Supreme Court’s decision in Baker was limited, it did rule that if a system other than one based on population is used for apportionment, the resulting districts must not be Arbitrary or irrational in nature. In 1964, the Supreme Court extended Baker by ruling in Wesberry v. Sanders, 376 U.S. 1, 84 S. 2d 481, that legislative districts for the House of Representatives must be drawn so as to provide « equal representation for equal numbers of people, » a concept often referred to as the one-person, one-vote standard. Later that same year, in lawsuits directly involving 15 states, the Supreme Court ruled in Reynolds v. Sims, 377U.S. 2d 506, that districts for state legislatures must also be substantially equal in population. Further extending the principle, the Court ruled in Avery v. Midland County, 390 U.S. 474, 88 S.

Allocating Nonbusiness Income

Members of Congress filed suit to block the use of sampling and the Supreme Court agreed with their position in Commerce Dept. v. U.S. The Court held that the Census Act, which was first enacted in 1954 (and amended a number of times since then), expressly prohibited the use of sampling to determine populations for congressional apportionment purposes. Such apportionment was, however, in certain cases allowed in England by the Distress for Rent Act 1737, and the Apportionment Act 1834 (4 & 5 Will. 4. c. 22), and is now allowed generally.

We calculate the priority values by dividing the state’s apportionment population by the geometric mean of its theoretical current and next seats. Apportionment also plays a significant role in estate law, particularly concerning the division of financial obligations such as debts and taxes among beneficiaries. When a person passes away, their estate may incur various expenses and taxes before assets are distributed to heirs. Tax apportionment determines which assets or beneficiaries will bear the burden of estate taxes. A contrasting approach, contributory negligence, is followed in a few jurisdictions. Under this strict rule, a plaintiff is completely barred from recovering any damages if they are found to have contributed to their own injury, even minimally.