Statements on Introduced Bills and Joint Resolutions

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

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By Ms. CANTWELL:

S. 479. A bill to amend title 4 of the United States Code to prohibit a State from imposing a discriminatory tax on income earned within such State by nonresidents of such State; to the Committee on Finance.

Ms. CANTWELL. Mr. President, today I am introducing legislation to correct a tax injustice affecting my home State of Washington, and all States that do not have a State income tax. My bill, the Nonresident Income Tax Freedom Act, would prohibit States from imposing income taxes on individuals that are not residents of that State. I hear about this issue in the areas of my State that border Oregon and Idaho, both States that have income taxes. In fact, wherever I go in Vancouver and throughout Clark County, I hear time and again from constituents about the unfairness of living in Washington State--a State that does not have an income tax--and working in Oregon--a State that does have an income tax and being taxed on their income earned in Oregon.

According to the Oregon Department of Revenue, in 2002, there were 51,991 Clark County residents working in Oregon. Taxed on their income, these nearly 52,000 individuals remitted $104 million to Oregon that year.

Representing all of Washington State in Congress, it is not lost on me that an additional 30,181 Washington State residents outside of Clark County were also employed in Oregon in 2002, and these 30,000 paid the State of Oregon $49.8 million.

Furthermore, there are Washington State residents working in Idaho. In 2002, 19,467 of them owed the State of Idaho $18.9 million in income taxes.

While I would like to hope that most Washingtonians could find employment in Washington State, and I am grateful for the job opportunities presented to Washingtonians in Oregon, I find it antithetical to notions of lifting up the economy of Washington State to have the incomes of Washington State residents taxed in Oregon.

We have historical roots in this country related to the notion of no taxation without representation. Washington residents being taxed in Oregon is contrary to this whole premise--a premise upon which American independence rested over 200 years ago.

Good tax policy rests on the notion that individual's contribution to the government through taxes brings benefits to those individuals--good schools, navigable roads, safe communities, clean water, and other services.

With incomes taxed in Oregon, Washington residents receive very little benefit for the contributions made to the State of Oregon. Granted, Oregon maintains the infrastructure used by Washingtonians to get to work; but there are a number of benefits that Washington residents never realize from the taxes they pay. For example, Washington State residents employed in Oregon and paying Oregon income taxes do not receive in-State tuition rates for college.

In addition, Washington State residents employed in Oregon and paying Oregon income taxes do not receive the benefit of paying less for fishing licenses. Examples of what this can mean: for 2005, an angling license for Oregonians is $24.75 for the year; for a Washingtonian who pays income taxes in Oregon, his/her angling license is $61.50--a 248-percent increase. The discrepancy in Idaho is even greater. For 2005, a combined hunting/fishing license for an Idaho resident is $30.50 and for a Washingtonian who is paying Idaho income taxes would be charged $181.50 for the same license--a 595-percent increase.

And first and foremost, Washington residents employed in Oregon and paying income taxes are not afforded voting rights in Oregon, thereby being taxed without representation.

The power for Congress to enact legislation to prohibit one State from assessing taxes on nonresidents working within that State exists in the Commerce Clause of the U.S. Constitution, Article I, Section 8, Clause 3. And Congress has exercised this authority in the past.

The Soldiers' and Sailors' Civil Relief Act of 1940 prohibits States from taxing the compensation of nonresident military personnel who are stationed in that State.

In July of 1977, Congress passed, and President Carter signed, legislation prohibiting the States of Virginia and Maryland, or the District of Columbia, from imposing an income tax against Members of Congress who maintain homes in those jurisdictions.

Additionally, with the Amtrak Reauthorization and Improvement Act of 1990, Congress granted tax immunity to employees of interstate railway, aviation, and motor carriers from paying State income taxes to any State other than an employee's State of residence.

It is time for Congress, once again, to utilize its authority under the Commerce Clause to prohibit the imposition of income taxes by States on nonresidents. It is my view that interstate trade in labor is important commerce that deserves to be treated fairly.

I ask unanimous consent that the text of the bill be printed in the RECORD.

There being no objection, the bill was ordered to be printed in the RECORD, as follows:

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