3-13-14 – Vermont’s policy of taxing out of state workers faces a possible federal fix

I received the following update from the Tax Foundation today, and why am I not surprised that Vermont is one of the states that, along with the subject of this article, Pennsylvania, has adopted this highly offensive tax policy? Here’s hoping for a rational fix at the federal level — and a lesson in what the Commerce Clause in the U.S. Constitution is actually for. 

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Pennsylvania Urged Not to Tax Out-of-State Emergency Responders

In early February, as 800,000 Pennsylvanians were without power due to winter weather, over 5,000 out-of-state emergency responders came to their rescue to restore power lines and getting electricity flowing again. A voluntary program exists to share personnel and resources between utilities in different states for just such emergencies.

However, a problem was pointed out last week by former Pennsylvania Public Utility Commission member Wayne Gardner, in an op-ed in the Pittsburgh Post-Gazette:

Unfortunately, there is a problem in Pennsylvania that recalls the old saying that no good deed ever goes unpunished: Our state requires out-of-state emergency responders and others who work here for a short period — even a single day — to file state income tax returns if they earn as little as $33. Only residents of Indiana, Maryland, New Jersey, Ohio, Virginia and West Virginia are excepted.

Put this issue on a personal level: Imagine an emergency responder who has a choice of being sent to Pennsylvania where this tax burden would be imposed upon her or another state where out-of-state emergency responders are exempt from state and local income taxes. At a time when state officials should be extending a hardy “thank you,” Pennsylvania state officials are yelling “pay me!”

Fortunately, U.S. Sen. Sherrod Brown, D-Ohio, and Rep. Howard Coble, R-N.C., have teamed up to solve this problem. Their legislation, The Mobile Workforce State Income Tax Simplification Act, is a joint Democratic and Republican effort to simplify the lives of workers who might spend a few days in other states as part of their employment. It would protect them from the cost and burden of complying with multiple state tax laws.

Pennsylvania is not alone in subjecting out-of-state visitors to tax withholding on their first day of travel:

Read more about the proposed federal bill here.

 

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