Taxation Without Representation Meets the 21st Century
24th June 2023
Most Americans pay state and local income taxes based upon where they reside. Accordingly, the shift to remote work made no difference to their tax liability. But some employees are subject to commuter taxes, which are assessed based upon where the work itself is performed.
Commuter taxes raise their own public policy concerns—after all, commuters have no say in how those tax dollars are used because they cannot vote in those jurisdictions. The antiquated justification for commuter taxes is that employees receive some tangible benefits while they are physically in the city, i.e., if an employee has a medical emergency while at work, it would be the city’s emergency services that would respond.
But what happens when commuters are no longer commuting to those cities?
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When Massachusetts issued a rule requiring employees who had previously worked in Massachusetts but were now working elsewhere due to Covid-19 to pay Massachusetts income taxes anyway, its neighboring New Hampshire sensibly filed a case in the United States Supreme Court on behalf of its citizens who were neither living nor working in Massachusetts. Unfortunately, taxpayers got no clarification because the Supreme Court declined to hear New Hampshire’s complaint, leaving Massachusetts’ unconstitutional money grab in place for the time being.