Legislation introduced by U.S. Rep. Mike Bishop (R-MI) to simplify state tax code cleared the House on Wednesday with bipartisan support.
The Mobile Workforce State Income Tax Simplification Act, H.R. 2315, would streamline state income tax code by establishing a 30-day threshold before non-resident income taxes go into effect for employees who travel for work.
“With so much red tape interwoven in today’s tax code, our Mobile Workforce bill is a commonsense way to cut through the clutter and simplify the filing process,” Bishop said. “By streamlining these requirements across states, we can reduce compliance costs and confusing paperwork for employees and employers alike. I urge the Senate to take up this bipartisan legislation to support our traveling workforce and help businesses grow and save.”
Under current law, workers are often required to file income tax returns in every state in which they work, while businesses must also comply with outside states’ different withholding requirements for employee travel.
U.S. Rep. Bob Goodlatte (R-VA), the chairman of the House Judiciary Committee, said that small businesses should not face added regulatory burdens because they send employees across state lines to conduct business.
“When a small business owner is faced with additional compliance requirements for employees in different states, those costs can add up and ultimately hurt the growth of the business as a whole,” Goodlatte said. “This bill also eases the compliance burden on hard-working Americans. One business owner told the Judiciary Committee that the compliance burdens from the patchwork of state laws falls on his employees, who ‘make less than $50,000 per year and have limited resources to seek professional advice.’”
Bishop and U.S. Sen. John Thune (R-SD), who introduced a Senate version of the bill, penned a joint editorial about the measure for the Ripon Forum last September.
“Rather than expanding their payrolls or reducing the prices of goods for consumers, businesses are being forced to re-allocate resources to comply with convoluted state income tax laws,” the lawmakers wrote. “The Constitution grants Congress the authority to enact laws that protect the free-flow of commerce between the states. While we support federalism and the ability of states to set their own policies, the problems created by allowing states to determine when they can impose income tax on residents of other states deserve a serious solution.”