|The Honorable Michael D. BishopU.S. House of Representatives428 Cannon House Office BuildingWashington, DC 20515||The Honorable Hank JohnsonU.S. House of Representatives2240 Rayburn House Office BuildingWashington, DC 20515|
Dear Representatives Bishop and Johnson:
On behalf of the members of National Taxpayers Union (NTU), I write to offer our support for H.R. 2315, the “Mobile Workforce State Income Tax Simplification Act of 2015.” This legislation will begin the important task of clarifying the issue of tax filing and withholding requirements for workers who perform duties of a temporary nature in states where they do not reside.
As you may know, NTU and its members are highly concerned that complex and burdensome multistate tax policies have often failed to adapt to the realities of a 21st Century economy. Indeed, many such policies have acted to impede development of modern, competitive business tools and practices. Among these are flexible, mobile workforces capable of engaging in productive activity wherever their immediate presence may be required, even if their office may be based in one state or their home.
While travel has long been requisite to more than a few professions, greater numbers of Americans today – including those who are self-employed – find themselves accepting short-term assignments outside their states of residence. Unfortunately, these situations can ensnare unsuspecting individuals with complex filing procedures while heaping more withholding rules on employers. As NTU’s most recent tax complexity study noted, federal personal income tax laws are onerous on their own, imposing some 6.1 billion hours in paperwork burdens and forcing individuals to shell out some $31.72 billion on tax software and other out-of-pocket expenses. State and local laws only compound this deadweight loss.
Fortunately, H.R. 2315 can help to address the problem, by establishing sensible guidelines within which states and localities can enact tax policies affecting nonresidents. The bill stipulates that a temporarily assigned employee’s earnings are only subject to a given jurisdiction’s tax laws when he or she works in the jurisdiction for more than 30 days out of a calendar year. The employee’s compensation would still be fully liable for whatever taxes may apply in his or her state of residence. The same standard would apply to employers for withholding purposes.
Much more work remains to be done – at all levels of government – toward simplifying tax provisions so as to improve America’s competitiveness and economic prosperity. H.R. 2315 is an important step Congress can take to meet these challenges, and we urge all Representatives to support this legislation.