Gov. Phil Murphy on June 29 said he was “disappointed” the nation’s high court would not hear a case New Jersey signed onto, taking aim at “double taxation” as millions of Americans find themselves telecommuting over state lines during the pandemic.
Under a court case that the state signed onto in December, New Hampshire asked the U.S. Supreme Court to curtail the ability for states to tax workers who may have previously commuted to work across state lines, but now spend the majority of the week telecommuting amid the COVID-19 pandemic.
Amid stay-at-home and telecommuting orders in place for most of the pandemic, more than 400,000 New Jerseyans who’ve commuted to New York instead worked from home, but still paid income tax to New York. In the case of New Hampshire, the state has no income tax, but residents commuting into Massachusetts still pay taxes to that state, even with most of them working at home because of the pandemic.
But the U.S. Supreme Court said it would not hear the case.
“I’m disappointed,” Murphy told reporters in Woodbridge following a Tuesday morning budget-signing event. “We’re considering our options here because we want to fight for New Jersey commuters and New Jersey taxpayers.”
He argued when the state signed onto New Hampshire’s legal matter in December that “hundreds of thousands of New Jersey residents who typically commute to New York and pay New York taxes have been working from home” for most, if not all of the pandemic.
New Jersey lawmakers meanwhile are also curious about how many tax dollars the state is missing out on because their taxes are going to New York.
A proposal that the state Senate approved in October would require the New Jersey Treasury Department to report the amount of credits paid each year between 2011 and 2020 to its residents who commuted to New York.
The Treasury would have to look at how those dollars can be recaptured for New Jersey, and what steps are being taken.
“The transition of New Jersey workers to telecommuting is something we’ve been watching for a long time,” one of the bill’s sponsors, Sen. Paul Sarlo, D-36th District, said in an October statement.
“It’s clear that the state of New Jersey can no longer afford to ignore the substantial tax implications of this shift, which has been supercharged as a result of COVID-19,”he added.
A Republican sponsor of the bill, Sen. Steven Oroho, R-24th District, said the current system for New Jersey residents commuting across state lines was insufficient and instead needed to be overhauled.
“While those workers should be paying tax to New Jersey at our lower rates for work performed in this state, the Murphy administration continues to advise their employers to withhold and remit income taxes for all work to New York,” he said in a June 28 statement. “It’s a massive giveaway that makes absolutely no sense.”