Income tax battle between Massachusetts and New Hampshire spills into Congress

A battle between Massachusetts and New Hampshire over charging income tax on out-of-state workers amid the pandemic has spilled into Congress after the Supreme Court tossed out the Granite State’s lawsuit earlier this week.

“The ability of Massachusetts or any other state to tax you should stop at the state line, and that’s what this legislation will ensure,” New Hampshire Rep. Chris Pappas said in a statement. “For the nearly one in five Granite Staters employed by companies out of state, every dollar they can keep in their pockets makes a difference, especially as we recover from the pandemic.”

Gov. Charlie Baker last year moved to continue charging a 5% income tax on nearly 100,000 out-of-state workers employed by Massachusetts companies even as nearly all their jobs turned remote amid the pandemic. Previously, a loophole allowed out-of-state workers to pay taxes only for the days they worked in the state.

Without action from the high court, Pappas — joined by members of Congress from New Hampshire and Connecticut — said “the most effective path forward to protect workers from unfair, out-of-state taxes” is to pass a bill that will block states like Massachusetts from taxing remote workers on income earned while they’re physically out of state.

It’s a fight that could potentially pit Connecticut and New Hampshire Democrats against the Massachusetts Democratic delegation.

None of the Bay State’s nine reps — all Democrats — weighed in on Thursday when contacted by the Herald.

The Baker administration has played the high court decision close to the vest so far. An administration and finance spokesperson Patrick Marvin only said the administration “appreciates the Supreme Court’s decision.”

U.S. Reps. Jim Himes and Jahana Hayes of Connecticut, and Annie Kuster of New Hampshire are the sole co-signers on the legislation as of now.

“If you wake up every morning in Connecticut, and walk downstairs to your home office in Connecticut, it only makes sense that you should be paying taxes to Connecticut, not to New York or whatever state your company’s headquarters happens to be in,” Himes said.

Kuster said, “Hardworking families in New Hampshire deserve peace of mind knowing they are not being unfairly taxed just because their employer’s headquarters is located in a different state.”

An analysis from a New Hampshire economic adviser estimates Massachusetts collects about $1.2 billion from New Hampshire residents who work remotely but are employed by an organization located in Massachusetts. S&P Global Ratings also said that Connecticut “estimates it will lose $339.0 million to $444.5 million of 2020 income tax revenue to New York State.”

State House News Service contributed to this report.

from Boston Herald https://ift.tt/3yd0cAl