The Sun
By Andrew Cline and Robert Alt
March 10, 2021
When
Massachusetts Gov. Charlie Baker declared a state of emergency on March
10, 2020, many New Hampshire residents who were commuting to the Bay
State began working from home instead.
Ordinarily,
Massachusetts could not continue withholding taxes from these workers’
paychecks while they were not working in the Bay State. But under a new Baker administration rule,
out-of-state remote workers were required to continue paying income tax
to Massachusetts — a state where they do not live, cannot vote, and no
longer work.
Remote-working
Granite Staters were understandably outraged. As was New Hampshire Gov.
Chris Sununu. Accordingly, New Hampshire Attorney General Gordon
MacDonald filed an original jurisdiction case with the U.S. Supreme Court to protect Granite Staters from Massachusetts’ unconstitutional money-grab. Fourteen other states, along with several public interest groups including The Buckeye Institute, have urged the high court to hear this consequential case.
New
Hampshire v. Massachusetts should matter to anyone who works from home
or employs remote workers. Teleworking has skyrocketed during the
pandemic, with approximately half of Americans now working from home,
according to a recent study by the Brookings Institution.
Software giant Salesforce.com, the largest private employer in San Francisco, recently announced
that most of its employees would continue to work remotely after the
pandemic, and that the company would shrink its physical office space,
as a leading indicator that American work and commuting patterns are
changing for the long term.
This
shift to remote work started well before the pandemic and benefits
employers and employees alike. It enables employers to attract top-notch
talent from outside of their immediate geographic area. It gives
employees the flexibility to locate their households in more affordable
or otherwise preferable areas. And it saves everyone money.
A Global Workplace Analytics study found
that those who work remotely half the time can save nearly $11,000 per
year for their employers and between $2,500 and $4,000 per year for
themselves.
The remote-work revolution can also help bridge the growing urban-rural economic divide. People who work from home are almost twice as likely
to earn a six-figure salary compared to the general population, and
small towns and rural areas stand to profit substantially if more
high-income earners relocate there while telecommuting to work for
employers in larger metropolitan areas.
Some government officials have lauded the shift to telework, and even encouraged it. As Gov. Baker himself said,
“Now as we look to the weeks and months ahead, we’re urging businesses
to continue to promote remote-work and work from home as much as
possible.”
The
governor, it seems, wants to have his cake and eat it too — advising
Granite Staters to stay home at the same time he taxes them as though
they didn’t.
If
being taxed without representation weren’t enough, Massachusetts — home
to John Hancock and the Boston Tea Party — wants to levy taxes for
unused services, too.
Being
taxed where you work makes sense only because the taxing jurisdiction
generally incurs commuters’ wear-and-tear burden on its roads,
utilities, community services, and infrastructure.
But
absent the commuter presence and burden to pay for the same, there is
no good reason — short of greed — to tax telecommuters’ wages while they
have no say or vote on the tax or the election of its assessors.
If
Massachusetts prevails in New Hampshire v. Massachusetts, other states
and jurisdictions will quickly adopt a similar soak-the-teleworker tax
policy. In Ohio, for example, cities are already taxing the income of
remote workers who used to work there, but are now working elsewhere.
Income taxes should be paid by people who live or, at the very least, actually perform work there.
Working
from home is here to stay. Employers and employees have both learned to
adapt and adjust their budgets to meet the demands of that new normal.
Governments should, too.
Unconstitutional
taxes levied upon the income of those who have no vote is neither just
nor sustainable given our new post-pandemic realities—and Massachusetts
(of all places) should know better.
Andrew
Cline is president of the Josiah Bartlett Center for Public Policy in
Concord. Robert Alt is president and CEO of The Buckeye Institute in
Columbus, Ohio.
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