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H.R. 3359 and H.R. 1360 Would Ease Tax Compliance Burdens for Traveling Employees and Telecommuters
November 7, 2007
Subcommittee on Commercial and Administrative Law
Dear Chairman Sanchez and Ranking Member Cannon:
On behalf of the 362,000 members of the National Taxpayers Union (NTU), I write to endorse H.R. 3359 (the Mobile Workforce State Income Tax Fairness and Simplification Act) and H.R. 1360 (the Telecommuter Tax Fairness Act). NTU encourages the joint advancement of both bills.
NTU and its members work to promote tax policies that are fair, equitable, and simple. We believe that the current patchwork of laws, which govern when a traveling or telecommuting non-resident employee must pay another state's income taxes, is in need of simplification. As America's workforce becomes more mobile and as our working environments become more flexible, we need forward-looking, pro-growth tax policies that reflect these realities.
H.R. 3359 would stipulate that non-resident employees would only be liable for taxes when they work in any given state or locality for more than 60 days in any calendar year. By setting a simple and uniform policy, this bill would help cut down on the billions of hours and dollars that are spent on tax compliance by employees and employers every year. Furthermore, according to testimony from the Council On State Taxation, adoption of this bill would result in a small net reduction (0.01 percent or $93 million) in revenue collections nationwide.
However, H.R. 3359 does not address the destructive policy of requiring employees of companies based "in-state" to pay income tax to that state regardless of where the work was performed - so long as the work could be performed "in-state." Although no other state besides New York currently applies its laws this way, as telecommuting becomes more common states will have strong fiscal and political temptations to harshly penalize out-of-state workers under their own laws. H.R. 1360, the Telecommuter Tax Fairness Act, would stop this anti-taxpayer practice.
Taken together, H.R. 3359 and H.R. 1360 would ease tax compliance for the nation's millions of traveling employees and telecommuters. We hope to work closely with you toward passage of these important bills. House roll call votes on H.R. 3359 and H.R. 1360 will be included in our annual Rating of Congress.