How can states tax remote workers? The answer may rest in the outcome of State of New Hampshire v. Commonwealth of Massachusetts, a lawsuit pending before the U.S. Supreme Court. On its surface, the Supreme Court petition may seem mundane, but pay attention, as this case may decide how remote workers are taxed across the nation.
The pandemic has changed so many things, including the way states get revenue. With just about anyone with the ability to work remote doing so, regional job-center states, which employ hundreds of thousands of out-of-state workers, are seeing a noticeable drop in income tax revenue. One solution is to tax remote workers based on the physical location of their office; a total of six states have a permanent rule to levy this tax. Massachusetts temporarily implemented this physical/remote tax (becoming the seventh state with this rule) due to the pandemic, which prompted the New Hampshire lawsuit. New Hampshire does not have a state income tax or general sales tax.
Fourteen states, some blue and others red, have submitted friend-of-the-court briefs on behalf of New Hampshire. Maybe this will be the topic that starts to heal the political divide. While the Supreme Court justices have yet to decide whether a hearing will be granted, it should be noted that the U.S. Supreme Court has original jurisdiction over disputes between two or more states.
This is turning out to be a great game of cat and mouse. We’ll see how it plays out. Read the article for more- and enjoy!
~Brian Kasal – The Leadership Matrix
To see the Supreme Court filing submitted by the State of New Hampshire, click here- State of New Hampshire v. Commonwealth of Massachusetts
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