Statement by Connecticut Senators on Reintroduction of the Telecommunter Tax Fairness Act

Statement

Today, Connecticut Senators Joe Lieberman and Richard Blumenthal released the following statement regarding the reintroduction of the Telecommuter Tax Fairness Act of 2011:

"The Telecommuter Tax Fairness Act enables businesses of all sizes to significantly cut their overhead and hire new workers while encouraging the practice of teleworking. As our nation continues to struggle with high unemployment and a debt crisis, we are pleased to introduce an additional tool to address these problems. Telework improves profitability, increases productivity and most importantly enables businesses to hire more workers. This bill would abolish the double tax penalty for interstate telecommuting by mandating that no state may tax income earned by nonresidents when they are physically present in a different state, making it easier for businesses to maintain their workforces. "

According to the National Broadband Plan, a Congressionally-commissioned report unveiled on March 16, 2010, by the Federal Communications Commission, as many as 14% of retirees, 31% of homemakers and 29% of adults with disabilities would be willing to join the workforce if given the option to telework. Furthermore, increasing telework opportunities could enable 17.5 million individuals to work, producing an estimated net increase of over $256 billion a year in income tax revenue, social security revenue and federal disability savings. Increased telework employment will also improve the profitability of American businesses, enabling them to hire the most qualified candidates, minimize turnover, increase productivity and continue operating when emergencies and natural disasters strike. Telework also relieves traffic congestion, lowers transportation infrastructure costs and reduces U.S. dependence on foreign oil, since studies indicate that billions of gallons of fuel can be conserved each year if more Americans were afforded the opportunity to telework."

Despite telework's obvious benefits, unfair state telecommuter tax penalties frustrate both the companies and the workers who want to adopt it. Although most states tax telecommuters on the percentage of time worked within that state, a few other states tax 100% of the income of nonresident teleworking employees whose companies are based in their state, regardless of the amount of time they are physically present in that state. Consequently, because telecommuters' home states can also tax the income earned at home, workers nationwide are threatened with double taxation on that income. This double tax risk puts telecommuting out of reach for many Americans. Our bill would abolish the double tax penalty for interstate telecommuting by mandating that no state may tax income earned by nonresidents when they are physically present in a different state."

The Telecommuter Tax Fairness Act enjoys bipartisan support and has been endorsed by the Telework Coalition, the National Taxpayers Union, the Small Business & Entrepreneurship Council, and the Association for Commuter Transportation, among others.

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