Tax laws

Reviews | These tax laws “make us all look down on”

Congratulations, road warrior. Last year, you did business in five states in one week – emails from airports, phone calls from taxis, video conferences from hotel rooms, business lunches here and there. Later, when you took a vacation in another state, you opened your laptop from time to time to connect with your colleagues.

Now the bad news: Depending on which states you’ve been to, you may need to file tax returns in all six states, even if your job only took a few minutes.

Ridiculous, right? But that’s what the law says. According to the Tax Foundation, there are 24 states that require people who have worked in their state to file tax returns no matter how long they worked or how little income they earned. (For example, Colorado, Massachusetts, New Jersey, Ohio, and Pennsylvania.) In five other states, including California, there is also no minimum time limit, although there is a threshold income below which you do not have to file a return.

Most states don’t chase short-term visitors for nickels and dimes, because it’s not worth it. You’re unlikely to get a threatening letter from Nebraska because of that work phone call you made when you attended that wedding in Omaha. As written, however, state laws “turn us all into jerks,” says Jared Walczak, vice president of state projects at the Tax Foundation.

It’s actually worse than that. Some people, like lawyers and accountants, can’t risk getting caught bending the rules, so they have to file returns in every state they’ve worked in, which for many can be a dozen or so. more. It’s also a paperwork burden for employers trying to follow the rules, as states require them to withhold state taxes from paychecks.

It’s understandable that states try to tax professional athletes, pop stars, and other high earners who work in their states, even briefly, because a lot of money is involved. But laws that target everyone are just a little silly.

Congress could solve the problem by saying that you don’t owe income tax in a state unless you work there at least 30 days a year. This would strike a reasonable balance between the competing priorities of completeness and simplicity, says Andrew Moylan, executive vice president of the National Taxpayers Union Foundation. Illinois and West Virginia have already set 30-day work minimums. Arizona, Hawaii and Utah have gone even further, with 60-day minimums.

There is legislation in Congress requiring a minimum of 30 working days for most people, excluding professional athletes and other “public figures”. This pass the House in 2012, 2016 and 2017. He is co-sponsored in the Senate this session by South Dakota Republican John Thune and Ohio Democrat Sherrod Brown, who disagree on much. But Senator Charles Schumer of New York, the majority leader, has always opposed the legislation.

New York State makes a lot of money taxing foreigners who come to the state – especially New York – for business. New York’s Tax and Finance Division “enforced the law aggressively and became more aggressive over time,” says Maureen Riehl, executive director of the Mobile Workforce Coalition. She says state employees go to trade shows at the Jacob K. Javits Convention Center in Manhattan and take photos of the booths so they can sue companies that send their employees to New York.

“Companies have told us they’ve avoided hosting events in New York City because of this,” said Ken Pokalsky, vice president of the New York State Business Council. “I’m not saying it’s widespread, but it’s one more thing.” He says his organization supports a minimum of 30 working days for state taxation. The state tax agency did not respond to my voicemail requests for a response.

(To complicate matters, there’s a related issue called the convenience rule that appears in the books of five states, including New York. These states claim the right to tax people if the company they work for is headquartered in the state. Thus, workers may be taxed on the same dollar of income by their home state and the state where their company is headquartered.)

State laws that require tax returns even for incidental work have become a bigger issue since the start of the Covid pandemic, as more and more people work remotely. But House and Senate sponsors aren’t pushing the bill this session because they think it doesn’t stand a chance, given opposition from two key New Yorkers: Schumer and Rep. Jerrold Nadler. , chairman of the House Judiciary Committee, by which the House bill must pass. “As long as they sit where they sit, that problem is on hold,” Riehl says.

Angelo Roefaro, Schumer’s press secretary, says Schumer and Nadler aren’t the only ones questioning the legislation. Roefaro says talks are continuing with other members of Congress, as well as state governors and lawmakers.

For now, nothing is happening. As the Tax Foundation’s Walczak wrote to me in an email: “Taxpayers shouldn’t be tasked with deciding when to ignore what is technically a tax filing requirement and when to comply. Tax laws must be enforceable and widely applied. If they cannot reasonably be enforced, or if it would be undesirable to do so, then it is worth reviewing this law.

I recently saw your newsletter about University of the People, the university that does not charge any tuition. The ability to go to college without paying for tuition could change the lives of many students. But the teachers are not paid. At a time when the current Ph.D. students are graduating in a crushing job market, if we promote educational models that further erode this job market, it will become impossible for most students to afford to pursue higher education and become teachers, compromising the quality of education we can provide as a nation.

Bruce Lenthall
Rosemont, Pa.

The author is the executive director of the Center for Teaching and Learning at the University of Pennsylvania.

“All day I biddy biddy bum / If I was a rich man.”

– Jerry Bock and Sheldon Harnick, “If I Were a Rich Man”, from “Fiddler on the Roof” (1964)

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