Today, the House Judiciary Committee approved H.R. 1864, the Mobile Workforce State Income Tax Simplification Act, on a bipartisan vote. The bill sets a minimum threshold for states to subject individuals to their state income taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. : presence of at least 30 days in the state. Currently, most states require tax payments and even tax withholdingWithholding is the income an employer takes out of an employee’s paycheck and remits to the federal, state, and/or local government. It is calculated based on the amount of income earned, the taxpayer’s filing status, the number of allowances claimed, and any additional amount of the employee requests. for workers in the state for much shorter periods of time, including as little as a day.
The vote occurred after an alternative (14 day threshold and no protection for those earning over $130,000) was defeated.
Growing state efforts to raid revenue from business travelers who are in the state for only a few days have created needless complexity and threaten to harm interstate commerce. The Constitution empowers Congress to limit the power of states to tax interstate commerce. Prohibiting states from requiring payment or withholding of income taxes from someone in the state for less than 30 days is a fair balance. However, the exclusion of professional athletes—many of whom are not wealthy stars—is unfortunate.