Legislation Requires State Treasurer to Report on New York’s Continued Taxation of Former Commuters from New Jersey
Trenton – The New Jersey Senate has approved legislation sponsored by Senate Republican Budget Officer Steven Oroho and Senate Budget Chairman Paul Sarlo that would begin to address concerns that New York is unfairly taxing former New Jersey commuters who have been working from home in the Garden State during the pandemic.
“It’s no surprise that New York wants to keep padding its budget at the expense of New Jersey, even if it no longer has a legitimate claim to our residents’ tax dollars,” said Oroho (R-24). “What is surprising, however, is that New Jersey has been so timid in addressing New York’s unjust taxation of New Jerseyans who are working from home and no longer commuting across the Hudson. The report that the Treasurer will be required to produce under this legislation will show the scope of the problem and set the stage for future action.”
In a recent NJ.com editorial, Oroho noted that nearly 400,000 New Jerseyans regularly went to work in New York before the lockdown orders and workplace restrictions associated with COVID-19.
According to the Wall Street Journal, just 10% of Manhattan office workers have returned to working on site, and few have plans to return before the summer of 2021 at the earliest.
The legislators said most former commuters to New York would pay less if subject to New Jersey’s lower income tax rates.
At the same time, the State of New Jersey could benefit from hundreds of millions or even billions of dollars in redirected income tax revenues that are currently paid to the State of New York.
“Companies are shedding expensive New York office space as they realize telecommuting works, and it’s likely that many of our former commuters will work completely or primarily from home going forward,” said Sarlo (D-36). “That makes New York’s continued taxation of New Jerseyans even more unjust. Unless we take proactive steps to address this unfairness, it will continue. This study required by this legislation is the first step in providing income tax relief to many New Jersey workers.”
The legislation, S-3064, requires the State Treasurer to examine New York’s taxation of New Jersey residents’ income. The report would be required to include:
- an explanation of efforts the State has taken to address the inequity of New York’s taxation of New Jersey resident’s income;
- the estimated total credits the State has granted, or will grant, to New Jersey residents for income taxes paid to New York in each tax year in each tax year beginning with Tax Year 2011 and ending with an estimate for Tax Year 2020;
- a discussion of steps that the State may take to protect the State of New Jersey’s public fisc, and the paychecks of New Jersey residents, from New York and its political subdivisions taxing authority;
- an estimate of New Jersey residents’ tax savings should the State be able to shift residents’ income tax payments from New York and its political subdivisions to New Jersey;
- a discussion of any state or federal statutory or case law impediments to successfully achieving equitable taxation of New Jersey commuters working for employers in New York;
- an analysis of how other states and jurisdictions address the tax implications of residents living in one state and commuting to another;
- a discussion of the State’s efforts to participate in the litigation between the State of New Hampshire and the Commonwealth of Massachusetts concerning Massachusetts’ taxation of New Hampshire residents, or if no efforts have been made, an explanation of why not; and
- recommendations as to how the State may resolve the inequitable tax treatment of New Jersey commuters working for employers in New York.
Oroho and Sarlo noted that other states with similar concerns are taking action as well. Last week, New Hampshire announced a federal lawsuit against Massachusetts for taxing the income of remote workers who no longer commute to the Bay State.