Telecommuters May Owe Extra State Taxes

marct22 writes "According to Cnet News, the US Supreme Court refused to hear an appeal by a Tennessee programmer who was forced to pay extra taxes because he was telecommuting to a job in New York. Apparently he worked in NY 25% of the time, which he didn't argue about, but the other 75% of the time he worked from home in Tennessee, which doesn't have income taxes. Also, it appears that right now, for those of us who live in one state and telecommute in another may be doubly taxed if both have income tax. There is a Telecommuter Tax Fairness Act in the Senate, but it has not emerged from committee so has not been voted on."

Comments

And his point is???

[Chocolate Teapot]

A guy plies his trade in a place where certain taxes apply and he has a problem with this? Since when did not having a physical presence in a place exempt you from from their laws? Really, as far as New York is concerned this guy is working in their manor and drawing an income from their economy and is therefore liable for their taxes. The fact that he does not actually shift his carcass over the the state line is irrelevant. Everyone expects free beer these days.

Re:And his point is???

[Angostura]

Speaking as someone who lives in London, UK, and is employed by a New York-based company, and pays UK taxes, I think I see a flaw in your argument.

Re:And his point is???

[grommit]

I think you're forgetting what those taxes are for. It may seem like it but taxes aren't there just to take your money. They're there for the government to provide services (such as roads, police, etc) for those people that make use of them, the residents. Hence, if you aren't a resident of a state and benefit in no way from the services that the government there provides, why should you be paying taxes to that government?

Re:And his point is???

[Laura_DilDio]

Screw that! Does he utilize any New York resources? Does he get the right to vote? No taxation without representation? Taxes paid while visiting in New York, or even taxes paid on wages earned while physically in New York are a little more understandable.

If they decide to tax this guy under the auspices that he is drawing an income on NY economy, then they should FULLY TAX all of the Indians who work at call centers for NY companies!

Re:And his point is???

[madajb]

That's the whole point of the Republic.
New York's laws stop at the New York border.
Tennesee's laws stop at the Tennessee border.

The fact that he did not "actually shift his carcass over the state line" (at least 75% of the time) is highly relevant.

-ajb

Re:SSH? VNC?

[TheOtherAgentM]

Seriously, I would owe taxes in a lot of states if this were taxable. Shouldn't you just tax a person in his place of employment if he is a remote worker?

You're missing the point

[Crazy Man on Fire]

Taxes pay for the services that you use. Is this guy using the roads to get to work? Are his kids going to the schools? No! Why should he pay for that stuff? The taxes he pays in his home state cover this stuff in his home state. The people who live in the other state should be paying for those services provided there.

Re:You're missing the point

[Soko]

Besides, does this guy get to vote in New York State elections now? If not, it's taxation without representation.

Soko

Re:You're missing the point

[iambarry]

If not, it's taxation without representation.
Lots of taxes are without representation. Non-citizens pay taxes, but don't vote. If you travel to another state and purchase goods you may pay sales tax, but not vote. I work in another state and pay plenty of taxes there, but can't vote there.

So, what's representation got to do with it?

He wants to earn money in New York (as they pay him in New York). New York wants to tax that money. The courts say New York has a right to tax income paid in New York. What's wrong with that?

Fairtax

[ScoLgo]

This is why the US of A needs the FairTax.

It would do away with all this income tax malarkey. At least at the federal level. Once that happens, it's a good bet that individual states would follow suit.

Re:Fairtax

[Monkelectric]

Every tax proposal I see somehow provides extreme benefit to the extremely wealthy. Is the fair tax any different?

Re:Fairtax

[GreyWolf3000]

Define what you mean by "extreme benefit."

The extremely wealthy are always going to be the best off at the end of the day. They are, after all, the richest. Any tax system that would break that would break the fundamental laws of the universe. You can't have the extremely wealthy wind up poor after taxes, and vice versa

As far as a tax code going out of its way to help the extremely wealthy, well, all I have to say is that our graduated income tax in the US pretty much proves that we don't have such a tax code.

Re:Fairtax

[ScoLgo]

Yes. It really benefits everyone. It's best to read it for yourself, but here are some quick points...

1. The tax burden shifts from those who work to those who spend. This would now include tourists, drug dealers, prostitutes, children, retirees, etc...

2. You are only taxed on new goods. Sell your used computer, car, house, whatever, without worying about taxes.

3. Every head of household will receive a monthly 'rebate' check from the federal government to reimburse the taxes collected on basic necessities. The closer to the poverty line you are, the larger the check. For instance, a family of four living at the poverty line would receive a monthly check of $497.00, (estimated at the time the Fairtax book was written).

4. Every pay period, you receive your gross wages. No Federal Withholding, no Social Security withholding, no Medicare withholding. Those taxes are paid from the sales tax.

5. No more April 15th. It's just another spring day.

6. Outsourcing of jobs and finances will stop as the flow is reversed to what will become the biggest and best tax haven in the world.

So... do the rich benefit? Sure they do. But not at the expense of the middle-class or the poor. Our current tax system is almost completely broken and needs a major overhaul.

Oh, and sooner is better than later.

Re:Fairtax

[ScoLgo]

"People with money do not need to spend it. They make money with money and do not need to spend it so they get weathier."

I respectfully disagree.

People with money may not need to spend it - but they do spend it. How about all those huge mansions that celebrities buy? The cars they drive? The private planes they have?

The problem with income tax is that the government takes your money up front and gives you back a small portion without interest - if you don't owe more than they've withheld, that is. It's much, much more simple to pay as you go. The amount of time that millions of people spend preparing their taxes, keeping records, etc. could be put to better use, could it not?

Income taxes foster tax loopholes. Sales taxes do not.

Re:Fairtax

[Ken D]

The other problem with switching to a consumption based tax is that it unfairly penalizes anyone who has been saving their (income)taxed income for the future. First they paid income tax when they earned it, now they're going to pay consumption tax when they spend it?

Re:Fairtax

[SeattleGameboy]

Only problem is that percentage of poor people's income spent on buying goods (necessary goods like food, clothing, etc.) is MUCH higher than rich people's income spent on buying goods (even when you factor in $35 million for Gulf Stream Jet).

Why should poor people pay more (in relative scale) than rich?

Even if you can address the equality issue, when you are rich, you have multitude of ways to avoid paying it.

Let's take the Gulf Stream example.

Let's say income tax has been replaced by 30% sales tax on everything you buy. "Well, no problem", says the rich. He just buys the Gulf Stream in France instead of US.

Let's say you somehow close that loop hole (I don't know of any easy ways), "well, no problem" says the rich. He creates a charitable organization which goes out and buys the Gulf Stream tax free and leases it back to the rich guy for pittance.

There is no tax system that cannot be gamed by people with resources to game it.

Re:So does this mean..

[magarity]

Parent is 'insightful', not funny.
 
Yes, they would, using the same logic as where the work is actually done whether it's from one state to another or one country to another. And to get you to pay it would probably be deducted up front and you'd have to file for a refund. Does India's equivalent of the IRS give a discount for income taxes paid to other countries like the US's IRS?

Re:The system works!

[mcrbids]

There is no worse tyranny than to force a man to pay for what he does not want merely because you think it does him good

Sounds good, but just rediculous when you think about it. Examples of "worse tyranny":

1) Force a man to pay for something he does not want because you think it will hurt him.

2) Force a man to pay for something desired by the ruling class, to hell with whether or not it hurts him.

3) Force a man to sit and rot in prison, unable to even distract himself from his misery with work routines because he disagrees with the ruling class.

4) Force a man to occupy a particular position in society, with no hope or opportunity of improvement or self-betterment.

5) .... I could go on, and on, and on, and on.

PS: I'm a populist libertarian.

Re:Maybe it's your definition of tyranny

[JesseL]

While it's true that the "no worse tyranny" quote is a bit strong on the hyperbole (why does everybody nitpick what constitutes 'the worst tyranny' rather than addressing its point? I'm gonna hafta get a new one.), I think that what you take for petty technicalities are simply an expression of most libertarians uncompromised belief in their principles. What good are principles if they are easily compromised?

I think you'll also find that libertarians are very well focused on solutions to the problems of "murder, mayhem, and general starvation and deprivation." Most libertarians see these issues as symptoms of the larger problem of misguided gorvernment mismanagement.

Stupid public policy

[einhverfr]

The problem I see though is that you could live in one high-income-tax state and work in another. This could effectively double one's taxes in extreme cases. Now, of course if you are a consultant and your own business, then the tax situation gets easier. So this is good for freelancers and bad for employees.

And with the attmept at the moment to take away the state tax deduction from one's income tax, this could get even messier.

It also seems to me that this could continue to accellerate offshoring trends...

Re:Missing the point!

[bnenning]

100% of taxes levied against businesses are paid by their customers or the company will go out of business.

They can also be paid by employees via lower wages, or stockholders via lower profits. Your central point is correct though: every tax is ultimately paid by a human being, but that's not obvious to most people which is why politicians like to "tax" businesses.

Re:Good news for ending offshoring? No, not really

[ShieldW0lf]

So, the real question is: Why is it fair that I pay a much larger portion of my wages than someone making less than me?

I'm not going to say it is or isn't fair, but there is a case to be made for the fact that when you're making such a dramatic amount more than your fellows, it's not because you were doing such a dramatic amount more work, it's because you managed to get a setup going where you're being paid for other peoples work, and you're getting a higher return on the infrastructure than others because you've got all your underlings using it to make you money. As in, I'm only using and relying on the infrastructure for my own use, but Bill Gates is using and relying on the infrastructure for the many thousands of people who work daily to earn him his money. It's not as cut and dried as that in most peoples cases, but the fundamental principle is the same. You pay more because, at the end of the day, it doesn't matter fair or not, if control over the wealth is concentrated in a few hands, those few hands are going to have to feed the machine that gives them that wealth whatever it needs or they won't continue to have it.