Under a state tax regulation known as the "convenience of the employer" rule, states may tax nonresidents who work for in-state employers and telecommute part-time on 100 percent of their income -- both the part of their salary they earn within the state and the part they earn in their home states ("Sneaky double taxes," Commentary, Friday). Because telecommuters' home states can also tax the income their residents earn at home, workers across America are taxed twice on the same wages.
The convenience rule creates prodigious payroll problems for businesses in a state maintaining the rule. For example, where should a firm withhold personal income taxes for interstate telecommuters -- in the company's state, the telecommuters' state or both? In addition, by making telework too expensive for many Americans, the rule thwarts businesses trying to scatter their workers and tap the significant cost savings and productivity gains that telework promises.
To ease the burden on both interstate telecommuters and their employers, members of Congress have urged their colleagues to focus on the Telecommuter Tax Fairness Act. This measure, which in recent years has also enjoyed bipartisan support, would bar states from taxing nonresidents on the income they earn when they are physically present in another state and remove the double tax threat. It would curb unjust extraterritorial money grabs and dismantle the regulatory barrier to workforce distribution that currently besieges U.S. businesses. As Congress considers simplifying tax compliance for companies operating across state lines, it should take up the Telecommuter Tax Fairness Act and finally make it law.
NICOLE BELSON GOLUBOFF
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