December 22, 2020
By Jacob Huebert
Normally, people pay income taxes to the state in which they live, or the state in which they work—not to both (if they’re different states), and of course not to some other state where they neither live nor work.
But now, Massachusetts is now trying to collect income taxes from people who don’t live or work there—specifically, some 123,000 former commuters who previously worked in Massachusetts, but who have worked from their New Hampshire homes during the COVID-19 pandemic. Of course, that’s not fair to those New Hampshire residents. They’ve chosen to live (and now work) in a state that doesn’t tax wages and salaries at all, and they shouldn’t be forever subject to taxation by a state in which they don’t live, and in which they can’t vote, just because they previously worked there.
And Massachusetts’s attempt to take Granite Staters’ money isn’t just wrong; it’s also unconstitutional. One reason why is because it violates New Hampshire’s sovereignty. That’s why the state of New of Hampshire has sued Massachusetts to end the attempted tax grab. It’s done so in the only court where one state can sue another: the U.S. Supreme Court.
The Goldwater Institute has joined an amicus brief by the National Taxpayers Union Foundation (NTUF), urging the Court to hear the case. The brief argues that this issue warrants the Court’s immediate attention because, if the Court doesn’t act now, more states will try to tax people outside their borders.
During the COVID-19 pandemic, the number of Americans who regularly telecommute has jumped from 5 million to over 50 million. The NTUF estimates that at least 2.1 million Americans who previously commuted across state lines now work from home. And although (one hopes) the pandemic might soon end, remote work is sure to be much more common afterward than it was beforehand.
With telecommuting as an option, many workers who have lived in relatively high-tax states to be near an employer will move and work remotely from states with lower (or no) income taxes. As they do, high-tax states are likely to try to keep taking their former residents’ money. (In another example, California has lately considered taxing former residents for a decade after they leave!) That would—deliberately—undermine our federal system, which encourages competition among states—which helps keep taxes and regulatory burdens low.
Fortunately, the Supreme Court can and should prevent that epidemic before it starts by hearing New Hampshire’s case and telling Massachusetts to keep its hands off people who have chosen to live elsewhere.
Jacob Huebert is a Senior Attorney at the Goldwater Institute.