Statement of Judiciary Committee Chairman Lamar Smith Full Committee Markup of "Mobile Workforce State Income Tax Simplification Act of 2011"

Statement of Judiciary Committee Chairman Lamar Smith
Full Committee Markup of
“Mobile Workforce State Income Tax Simplification Act of 2011”

Chairman Smith: The American workforce is increasingly mobile.  Fifty years ago, most people worked in the communities in which they lived.  Today, many more Americans travel to other states for work.  Facilitating a mobile workforce is a fundamental example of the power to regulate “interstate commerce” the Founders delegated to Congress in the Constitution. 

The complexity and variation among state income tax laws is a burden on interstate commerce.  In some states, for example, a non-resident employee must pay income tax if they work there for only one day.  But in other states, income tax liability is not triggered until the 60th day.

Under this current patchwork system, employees who travel out of state for work must file tax returns in other jurisdictions even if their ultimate tax liability to a state is a few dollars. 
In addition to burdening our interstate employees, different state income tax laws require employers to comply with a wide variety of tax withholding laws.  Many of those employers are small businesses who can least afford these administrative costs.

That is why I support Subcommittee Chairman Coble’s bipartisan bill, the Mobile Workforce State Income Tax Simplification Act.  I appreciate Mr. Johnson’s cosponsorship of this legislation.

This bill simplifies state income tax policies without infringing on the rights of states to set their own tax rates.  The bill provides that a state may not impose its income tax on non-resident employees unless they earn wages in the state for more than 30 days.  The employee would still owe an income tax to their state of residence for wages earned during the first 30 days they work in a non-resident state.

This bill eases the burden that the current patchwork of state income tax laws places on traveling employees and small businesses.  So rather than increasing the expense of navigating the maze of tax rules, businesses can use their resources to invest in creating jobs for American workers.