Commuter tax

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A commuter tax is a tax (generally on either income or wages) levied upon persons who work, but do not live, in a particular jurisdiction. The argument for a commuter tax is that it pays for public services, such as police, fire, and sanitation, received by and beneficial to people who work within the jurisdiction levying the commuter tax. Arguments against such a tax are that it acts as an incentive for businesses to relocate outside of the jurisdiction, along with their residents.[1] In some cases, individual cities may be barred from enacting a commuter tax even though the state governments may impose a non-resident income tax. States may choose to enter "reciprocal tax agreements" to exempt non-residents from some local taxes.[2]

Until 1999, New York City had a commuter tax, and there are periodic calls for its reinstatement.[3][4] A commuter tax in New York City would have to have support from the State Legislature in order for reinstatement, and since the majority of state legislators represent people who do not live in New York City, the tax tends to be unpopular.[5]

While the city of New York is barred from charging its own commuter tax, the state of New York does impose an income tax on non-residents that work in the state.[6] In 2009, New York enacted the Metropolitan Commuter Transportation Mobility Tax, a 0.34% levy on payrolls and self-employment earnings in New York City and Nassau, Suffolk, Westchester, Rockland, Orange, Putnam, and Dutchess counties. This tax, known popularly as the "mobility tax," is not a commuter tax, but is intended to provide funds for the Metropolitan Transportation Authority, which transports many of the region's commuters.[7]

Philadelphia has a 3.924% wage tax on residents and a 3.495% tax on non-residents for wages earned in the city as of August 2013.[8]

Washington, D.C., has sought to enact a commuter tax to recover costs of providing city services to the approximately 300,000 people who commute to the city from suburban Maryland and Virginia. However, in the 1973 District of Columbia Home Rule Act, the U.S. Congress barred the city from enacting such a tax .[9]

See also[edit]

References[edit]

  1. ^ Gessing, Paul (2003-06-18). "Commuter Taxes: Milking Outsiders for All They're Worth". NTUF Policy Paper 141. Archived from the original on 2007-09-28. Retrieved 2008-03-13. 
  2. ^ Ditmer, Robert W. "State Tax Reciprocal Agreements". Payroll-Taxes.com. Retrieved 10 July 2012. 
  3. ^ McMahon, E.J. "Wrong Time For A Commuter Tax". Retrieved 2008-03-13. 
  4. ^ Moynihan, Colin (2008-11-23). "Proposal to Raise Car Fees". The New York Times. Retrieved 2010-04-30. 
  5. ^ "The Commuter's Fair Share". The New York Times. 2002-12-09. Retrieved 2008-03-13. 
  6. ^ Noonan, Timothy P. (February 26, 2010). "The Ins and Outs of New York Nonresident Allocation Issues". State Tax Notes. Hodgson Russ LLP. Retrieved 10 July 2012. 
  7. ^ "Metropolitan Commuter Transportation Mobility Tax", Weiser Tax, May 2009 
  8. ^ "Philadelphia Department of Revenue". Retrieved 2013-08-21. 
  9. ^ Eric M. Weiss, D.C.'s Bid To Impose Commuter Tax Denied, Washington Post, Saturday, November 5, 2005; Page A01