Washington — The Supreme Court handed states a dollars-and-cents victory, ruling they may tax the income of foreign subsidiaries of American corporations. The 5-to-3 ruling upheld a California law - similar to laws in 22 other states - that calls for taxation of that portion of the overall income of a corporation and its foreign subsidiaries attributable to the parent company's operations within state boundaries. The court said double taxation - as the corporations call it - is permissible, and rejected claims it invites retaliation by foreign nations against US companies abroad.
Corporations had argued such taxation is unfair because they should not have to pay state taxes on income earned abroad by foreign subsidiaries. But the states maintain it prevents giant companies from avoiding taxes by shuffling profits among subsidiaries.
In other actions, the court:
- Rekindled hopes in law enforcement circles that it will relax the ''exclusionary rule'' of criminal evidence. The justices agreed to consider creating a ''good faith'' exception to the controversial rule, which bars use at trial of illegally seized evidence.
- Ruled 6 to 3 that unmarried fathers may lose fundamental parental rights if they fail to maintain a relationship with their illegitimate children.
- Ruled unanimously that police have a constitutional duty to secure medical treatment for suspected criminals who are injured while fleeing, but did not resolve who must pay the bill.