Out of Control Policy Blog

Taxing the telecommuterís gig

Thomas Huckaby is a computer programmer. His employer is located in New York, but he only spends about a quarter of his time there. He mostly works from Tennessee.

For Huckaby and his employer this arrangement seems to work well. Not so for the state of New York, where officials haven't cheered telecommuting as an innovation that reduces congestion, cuts business costs, and gives workers more flexibility.

Nope, officials there just want "their" tax money. Looks like they've won:

    Commuters from out of state who take cars, trains and buses to jobs in New York have long grumbled about having to pay New York State income tax. A ruling handed down on Tuesday by the state's highest court found that the growing ranks of telecommuters from out of state must also pay.

    The Court of Appeals ruled 4 to 3 that a computer programmer for a group of trade unions in Queens who works mostly out of his home in Nashville must pay New York State tax on all his income, not just on part.

    The Court of Appeals ruled 4 to 3 that a computer programmer for a group of trade unions in Queens who works mostly out of his home in Nashville must pay New York State tax on all his income, not just on part.

    The programmer, Thomas L. Huckaby, had argued that since he worked only a quarter of the time in Queens, he should pay New York tax on only a quarter of his income. But the court ruled that because the source of Mr. Huckaby's income was in New York - and because he was in Tennessee as a matter of personal convenience, and not because his employer needed him to work there - he must pay tax on his full income.

    The decision, by Judge Susan Phillips Read, stated that he "is the one who chose to accept employment from a New York employer (with the advantages of a New York salary and fringe benefits) while maintaining his residence in Tennessee, some 900 miles and a two-hour plane trip distant from his New York employer's office."

    In a strongly worded dissent, Judge Robert S. Smith wrote that he was "aware of no case in which it has been held, or even argued, that an in-state source of payment for services done outside the state is a constitutionally valid basis for taxing the recipient of the payment."

    State officials were pleased because the decision upheld their rule governing the taxation of people who live outside the state.

For more on telecommuting, go here.

Ted Balaker is Producer


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