01/25/2021
Prior to the pandemic, if you were an out of state resident who worked in Massachusetts, you were only subject to the state’s 5% income tax for the days you physically worked in-state. That was a clear, common sense rule, fair to all parties involved.
With the meteoric increase in the number of white-collar workers now working from home due to the pandemic, the Governor’s office has decided to change that interpretation of the rule. Out of state residents who work for a company based in MA now need to pay state income taxes, even if they now work entirely from their home offices. This rule was not passed by the legislature and did not go through the normal legislative process. Instead, an unelected bureaucrat within the Governor’s administration unilaterally changed the rule.
The headache this creates for these out state workers stems from the fact that they could easily be hit with two state income tax bills, one from their home state, and the other from Massachusetts. Gov. Chris Sununu (R-NH), has urged Governor Baker to drop his new rule, but Gov. Baker has so far refused. Now, Gov. Sununu is suing the state of Massachusetts and has petitioned his case to the Supreme Court of the United States (SCOTUS). NH workers do not have to pay a state income tax, and that is one of the many reasons for why they choose to live in NH. SCOTUS is the only court that can resolve disputes between the states and many other states have already joined New Hampshire in their legal fight.
This issue was highlighted by Jeff Jacoby, The Boston Globe’s most thoughtful opinion writer.
MassFiscal has taken a position against the Governor’s new rule. It confuses the tax code, makes for bad economic policy, and it patently unfair to workers. Right now, Massachusetts has the highest unemployment in the country. Despite this, the legislature and Governor’s office let many new regulations and taxes go into effect on business owners and their workers this January. Massachusetts is even going as far as taxing some forms of the PPP grants companies received from the federal government to help to keep themselves afloat. Businesses are running out of reasons to stay in state, and this new development further pushes them out.
Governor Charlie Baker, Lt. Gov. Karyn Polito, Speaker Ron Mariano, and Senate President Karen Spilka should be doing everything they can to encourage an economic recovery and help businesses keep employees on their payrolls. This rule change does not do that. We hope SCOTUS will take this case and restore common sense to our tax code.
