Today, Congressman Jerrold Nadler (D-NY), senior Member of the House Judiciary Committee, spoke in opposition to the Mobile Workforce State Income Tax Simplification Act of 2017, which would limit New York’s ability to control its own tax policies, costing the State between $95-120 million.  The bill prohibits states from deciding their own timeline for when it is appropriate to tax individuals who conduct business within their jurisdiction, setting an arbitrary national threshold of 30 days.  Congressman Nadler offered an amendment to lower the threshold to 14 days, which would save New York at minimum an estimated $80 million in projected revenue. 

Below is Rep. Nadler’s full statement, as prepared, opposing the Mobile Workforce State Income Tax Simplification Act of 2017:

“Mr. Chairman, I have an amendment at the desk.

“Mr. Chairman, this legislation represents a major assault on the sovereignty of states, and does particular damage to my home state of New York, depriving it of more than $100 million of its own tax revenue.  My amendment, which I am offering along with the Gentleman from New York, Mr. Jeffries, would reduce, from 30 days to 14 days, the threshold under this bill for when a state can tax a nonresident doing business in that state.  This minor change, alone, would lessen the impact on New York by as much $85 million.

“Simplifying and harmonizing the rules on when states may tax individuals who perform limited work in their states is a worthy goal.  And I support efforts by the States and the Multi-State Tax Commission to resolve this issue.  New York has been an active participant in these negotiations and wants to reach a fair solution.  But imposing a solution on states—and one that would cause such a large financial burden on particular states—is clearly not the answer.

“The power to tax is a key index of sovereignty.  Yet this legislation would prohibit states from taxing activity within their own borders, except as prescribed in the bill.  I think that is constitutionally dubious.  Although I take a broad view of the Commerce Clause, I do not think that it extends to a state’s ability to tax a person doing business solely within its borders.

“This bill is also deeply troubling as a matter of policy.  Under this legislation, if you work in a state in which you are not a resident, for fewer than 30 days, your income will not be subject to tax by that nonresident state.  That amounts to six weeks of five-day work weeks.  While a de minimus exception may make sense, I hardly think that six weeks is de minimus.

“In some states, the 30-day threshold may not have a great fiscal impact.  But, New York State is home to New York City, the nation’s center of commerce, which also sits across the river from New Jersey, and just 12 miles from Connecticut.  This makes New York a major destination for out-of-state business travelers and makes it, by far, the hardest-hit state under this bill.  At this time, I ask unanimous consent to enter into the Record a letter from the New York State Department of Taxation and Finance estimating that the State would lose between 95 and 120 million dollars as a result of this bill.

“This enormous financial loss would come at a time that the President and the Republicans in Congress are proposing to shift significant responsibilities to the states, while simultaneously slashing federal assistance.  And, in a particularly outrageous move, the Manager’s Amendment to the TrumpCare/RyanCare bill would saddle New York State with billions of dollars in additional Medicaid costs so that upstate counties can give their residents a property tax cut.  If we further deprive New York of $100 million under this bill, vital services like education, law enforcement, and health care could all be on the chopping block.  The results could be catastrophic.

“My amendment, therefore, attempts to contain at least some of this damage.  It would reduce the bill’s 30-day threshold to a far more reasonable 14 days, which is still almost three weeks of work that someone may perform without being subject to tax.  If employers and employees would be expected to monitor and track their time over 30 days, it does not seem like a greater imposition to do so for a somewhat shorter period like 14 days.

“With my amendment, the expected impact on New York would be reduced from more than $100 million to $12-15 million a year.  While still a significant revenue loss, this change would go a long way toward mitigating the concerns that New York has expressed.

“This is a reasonable amendment, made in good faith, that would make the bill much fairer, while still achieving the bill’s underlying goals. I urge adoption of the amendment and I yield back the balance of my time.”

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