First, there is no offsetting credit in CT for taxes levied by NY (unconsitutionally, as the Professor argues) for those days that a telecommuter who resides in CT and whose employer is located in NY works from home in CT. As a CT resident, days physically present in CT while earning income are taxable by CT, as would be the case in approximately 48 other states, except NY and one or two other states with a “unique” (and again, unconstitutional) perspective. So, on the days a CT resident works from his home in CT, CT imposes a 5% income tax and NY claims an 8.79% tax for a whopping 13.79%. Hence, the double taxation.

Second, its specious to argue that CT’s tax rate, at 5%, is far less than NY’s at 8.79%. That’s like comparing apples to oranges. CT has virtually no deductions or credits and the 5% applies to almost all income, unlike NY’s political tax code which permits a myriad of deductions and credits, including substantial property tax decutions. The net effect is that income taxes in a great many cases are higher in CT than if that same income were earned in NY.

Jack Jones

So what you are saying is that you have strong ties to two or more jurisdictions, and that one of these jurisdictions is overreaching in its attempts to tax your income, resulting in double taxation to you. Correct?

I am glad you think this is an issue. I would agree. As a long-term American expat, I and 5 million others have had to pay taxes in the foreign country I resided in AND to the US, resulting in a double taxation that no amount of tax code tinkering can entirely eliminate.

The next time Congress raises taxes on Americans overseas on the theory that they are getting some sort of “break”, perhaps we can call on you to explain the reality of tax overreach to them?

Good luck, and thank you for giving me a new perspective on my issue.

At the end of the day, New York’s economy is providing Prof. Zelinsky’s job (it’s certainly a lot easier for Cardozo to garner students in NYC than Connecticut), and it doesn’t seem unfair to me that New York taxes his income. Sure, it’d be nice if Mr. Zelinsky only had to pay Connecticut’s 5.0% rate on days where he works from home, especially now that New York’s top rate has increased to 8.97%. But for jobs that are clearly New York-based, it seems that this sort of arrangement could lead to shrewd gaming of the system, particularly by high-income “knowledge-based” workers with the ability to shift their income across state borders.

The threat of double taxation is a powerful reason for workers to dismiss the idea of telecommuting. As a result, the penalty thwarts businesses and government agencies trying to plan for a crisis by growing a staff of seasoned teleworkers – employees fully trained and equipped to sustain operations from a distance when on-site work is unsafe. By impeding contingency planning, New York’s telework tax policy puts employers, as well as employees, at risk.

In response to the swine flu outbreak, Washington has been encouraging both public and private sector employers to increase their reliance on telework specifically to assure business continuity. New York’s choice to punish telecommuters flies in the face of this federal effort.

Because telework can help contain the H1N1 virus we currently face and help both employers and workers prepare for future threats, the penalty for telecommuting must be banned – now, and for good. The Telecommuter Tax Fairness Act is the right solution.