Goodlatte Floor Statement on H.R. 2315, The Mobile Workforce State Income Tax Simplification Act

Chairman Goodlatte: The Mobile Workforce State Income Tax Simplification Act provides a clear, uniform framework for when States may tax nonresident employees who travel to the taxing State to perform work. In particular, this bill prevents States from imposing income tax compliance burdens on nonresidents who work in a foreign State for fewer than 30 days in a year. The State tax laws that determine when a nonresident must pay a foreign State's income tax and when employers must withhold this tax are numerous and varied. Some States tax income earned within their borders by nonresidents even if the employee only works in the State for just one day.  These complicated rules impact everyone who travels for work and many industries. As just one example, the Judiciary Committee heard testimony in 2015 that the patchwork of State laws resulted in a manufacturing company issuing 50 W-2s to a single employee for a single year. The company executive also noted regarding the compliance burden that, "[m]any of our affected employees make less than $50,000 per year and have limited resources to seek professional advice." States generally allow a credit for income taxes paid to another State. However, it is not always dollar for dollar when local taxes are factored in. Credits also do not relieve workers of substantial paperwork burdens. There are substantial burdens on employers as well. The Committee heard testimony in 2014 that businesses, including small businesses, that operate interstate are subject to significant regulatory burdens with regard to compliance with nonresident State income tax withholding laws. These burdens distract from productive activity and job creation. Nevertheless, some object that the States will lose revenue if the bill is enacted.  However, an analysis from Ernst & Young found that the bill's revenue impact is minimal. There is little motive for fraud and gaming because the amount of money at issue, taxes on less than 30 days' wages, is minimal.  Also, the income tax generally has to be paid, the question is merely to whom. I commend the bill's lead sponsors, Representatives Bishop and Johnson, and thank all of the bill’s cosponsors. I urge the bill’s passage, and I reserve the balance of my time. ###