NewsMoneyDon't Waste Your Money


Remote workers call income taxes unfair

They call local tax 'taxation without representation'
Employers reimbursing work-from-home expenses
Posted at 12:13 PM, Jan 06, 2021

Millions of Americans are now working from home, with the pandemic shutting down their offices since last March.

Now, a growing number of remote workers are asking why they have to pay taxes to a city they no longer work in or visit, especially since they may not return to their offices until sometime later in 2021.

On many suburban streets these days, you can see plenty of cars in driveways at midday, as people who used to commute to their jobs are now working from home.

Among these new remote workers is Austin Herman, a data analyzer who left his office in a downtown office tower back in March.

But he still has to pay local city income tax to a municipality, with an almost 2% rate.

"I don't vote for the city council there; I don't get the services any more, and I still have to pay," Herman said.

It's real money. If you earn $60,000 a year, a 2% income tax costs you $1,200 a year, which you pay to a city where you don't use any services.

"That's taxation without representation to me," Herman said."That's an issue. I am surprised they can still do that."

Frustration grows among remote workers, lawmakers

More and more workers and some state lawmakers agree.

Proposed laws in several states would prohibit cities from taxing you, if you are no longer physically there for work.

But even though you are working at a computer in your kitchen or bedroom, cities argue that your employer is still located within their boundaries.

And they desperately need that money to stay solvent in these tough times.

Cities claim they could be devastated by tax losses

Kent Scarrett represents cities as director of the Ohio Municipal League.

"If we had a sudden loss in revenue, our larger communities would really see a challenge in funding police and fire, which makes up 80% of their general operating budget," he said.

Scarrett says if remote workers stopped paying the tax, some cities might face bankruptcy. It could devastate big employment centers like New York City and Chicago.

He says cities might be forced to lay off essential workers and cut services.

But Herman said there has to be another way to raise revenue, especially since many remote workers may never return to their downtown offices.

"They're going to have to find better ways to fund these services going forward, not just during the pandemic," Herman said.

In the meantime, most states now have emergency laws in place to continue taxing remote workers until the pandemic ends.

So for now, you have to pay those city taxes even if you are working in a spare bedroom, so you don't get in trouble with the tax man, and you don't waste your money.

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