Mobile Workforce State Income Tax Simplification Act of 2015
Floor Speech
Mr. Speaker, I rise in opposition to H.R. 2315. This bill represents a major assault on the sovereignty of the States, and does particular damage to my home State of New York, depriving it of more than $100 million of its own tax revenue. The Mobile Workforce State Income Tax Simplification Act would prohibit States from collecting income tax from an individual unless the person works more than 30 days in that State in a calendar year.
Simplifying and harmonizing the rules on tax collection across the country is a worthy goal, but this bill would block States from setting their own tax policy within their own borders. That is both highly questionable, as a matter of constitutional law, and deeply troubling, as a matter of policy.
The power to tax is a key index of sovereignty, yet this legislation tells States they may not tax activity solely within their borders except as prescribed in the bill. I find this constitutionally dubious. Although I take a broad view generally of the Commerce Clause, I do not think it extends to a State's ability to tax a person doing business within its own borders.
Setting aside that concern, however, this bill would do great harm to a number of States, most especially to New York. According to some estimates, New York State could lose up to $125 million annually if this bill were enacted.
New York City's unique location as the center of commerce for the Nation as well as its physical proximity to two other States means that many individuals go there throughout the year for business purposes. But if you work fewer than 30 days, which is up to six 5-day workweeks, this bill would strip New York of its right to tax any of your business activity within its borders. That is both grossly unfair and extremely costly. While a de minimis exception might make sense, I hardly think that 6 weeks and $125 million is de minimis.
This bill comes at a time when Congress is intent on shifting more and more responsibilities to the States. As States continue to struggle with budgets that are stretched ever thinner, we should not further limit their authority to tax and deprive them of yet more revenue. The fiscal impact of this bill on certain States may be quite minimal but, on others like New York, it would be catastrophic. If we deprive a State of $125 million each year, vital services like education, law enforcement, and health care could all be on the chopping block.
During consideration of H.R. 2315 in the Judiciary Committee, I offered two amendments that would have mitigated its impact. The first would have reduced the bill's 30-day threshold to a more reasonable 14 days, which is still almost 3 weeks of work without being subject to taxation. The other would have added highly paid individuals to the bill's list of exemptions, which would help avoid loopholes that could allow wealthy people to escape millions of dollars of taxation.
Had my amendments been accepted, the expected impact on New York would have been reduced from more than $100 million to roughly $20 million a year. While still causing a significant drain on resources, these amendments would have gone a long way toward making the bill fairer, while still achieving its underlying goals. Unfortunately, they were defeated and, therefore, I must oppose the bill.
When the gentleman speaks of a company with 50 W-2 forms for one employee, if those W-2 forms total a few million dollars, that is not very burdensome. If they are for $50,000, I understand the point. My amendment would have taken care of that.
I should note that this is not just about New York and that several other States would be similarly affected by this legislation. In addition, the bill is opposed by a broad coalition of labor and tax organizations, including the AFL-CIO, AFSCME, SEIU, the International Union of Police Associations, the Federation of Tax Administrators, the Multistate Tax Commission, and many others.
We should not be depriving States of the ability to tax within their own borders as we are transferring more functions to the States and cutting back on Federal spending. I urge my colleagues to join me in opposing this unfair and misguided legislation.
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Mr. NADLER. Mr. Speaker how much time do I have remaining?
Mr. Speaker, whatever the gentleman may say, the fact is this bill, since it deals only with earnings earned completely within a State, represents a major assault on the sovereignty of the States. It is one thing to say that interstate commerce must be regulated, that the State's ability to extend its tax out, its tax through a company without much nexus to the State that sells into the State can be regulated, but that is not this.
What this says is: We are going to limit the State's ability to tax economic activity that occurs entirely within the State.
Now, one might argue that if someone only spends a couple days in the State, you shouldn't tax that because it will discourage doing business in the State; and maybe if I were still a member of the State legislature, maybe I would argue that. But that is an argument for the State legislature. It is not an argument for Congress. That is an argument on the economic merits of the State's exercise of its own tax powers and its own judgment within its own borders. For Congress to step in and say: New York must forgo $125 million in revenue or some other State must forgo $55 million or maybe $22.38 entirely based on economic activity within that State is, frankly, none of our business.
Today we talk about the burden that this imposes. Yes, a State might be wise to exempt small amounts of income so you don't need 50 W-2s to someone who earns a total of $50,000, but for someone who earns $50 million and may earn $20 million in a couple of days in a State, that State ought to be able to tax it, and it ought to be up to the economic and political judgment of that State as to how, in the interests of economic intelligence, to limit its exercise of its taxing power so as not to discourage business. That is a State's decision.
We hear a lot of rhetoric about States' rights and sovereignty and yielding power to the States on the floor, but here is an example going much farther than anything else I have seen, frankly, of the Federal Government stepping in and saying to a State: You may not exercise your taxing power within your State when it has nothing to do with another State.
If someone comes into the State and earns $50 million in 10 days or 3 weeks or 4\1/2\ weeks, why shouldn't that State be able to tax it if it wishes to? By what right does Congress tell it that it can't? By what right does Congress tell New York: You must forgo $100 to $125 million in revenue?
Even the efficiency argument doesn't make much sense with today's computers and computer ability.
So I think that this is an invasion of States' rights. It is an invasion of the core ability of the State to tax within its own borders. It is an invasion of--it is not a theft--it is a deprivation, my own State is about $125 million, which our taxpayers will have to make up, and it is wrong for that reason.
Now, I understand why ALEC might support this bill. ALEC wants government to do nothing, wants the Federal Government not to tax, the State governments not to tax, and have as little power as possible. That is a view, but it is not a view that justifies the Federal Government telling a State and telling the States' voters that, whether they like it or not, they shouldn't tax economic activity within that State, they should come up with the money some other way or they should have less State services. That is for the States' taxpayers, the States' voters to decide.
This bill is an imposition on the States. It is an imposition on the people of the States. It is wrong.
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