In this second part of the halftime report for Tax Foundation Forum: Making Sense of Profit Shifting, we discuss the key takeaways from the first half of our series on profit shifting (read part I here). In this post, we...
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- Congress May Vote on Bill Limiting State Taxation of Busi...
Congress May Vote on Bill Limiting State Taxation of Business Travelers
We've gotten word that the House of Representatives may consider H.R. 1864 this week, the Mobile Workforce State Income Tax Simplification Act. The bill would prohibit states from imposing income taxes on traveling workers unless they spend at least 30 days in the state. Currently, most states require tax payments and even tax withholding for workers in the state for much shorter periods of time, including as little as a day. (In that map below from the Council on State Taxation (PDF link), that's the red states.)
Such practices disrupt interstate commerce and falsely suggest that business travelers earn their income in traveling states and not from the home office. In recent hearings, Congress has shown its outrage at these state practices. Because of the tax credit for taxes paid to another state, this just shifts money around the country, toward states with the most aggressive rules. We're hearing more and more stories about state tax departments auditing travel records.
We'll update with more on the progress of the Mobile Workforce bill.
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