A bill authored by U.S. Rep. Howard Coble (R-NC) to bring some tax relief to those workers employed in more than one state was passed by the House this afternoon. Congressman Coble’s bill, approved by voice vote, recognizes that today’s workforce is mobile and the tax code must reflect that.

The House approved H.R. 1864, the “Mobile Workforce State Income Tax Simplification Act of 2011.” The bill was authored by Rep. Coble, along with Rep. Hank Johnson (D-GA), and was supported by many groups, including the National Taxpayers Union and the National Association of Manufacturers.

Rep. Coble’s complete floor statement is below:
“On my way back to Washington, D.C., this past weekend, I looked around in the airport and saw hundreds of business travelers getting ready to board airplanes, leave North Carolina, and conduct business in another state. This happens every day in every state in America. The American workforce is more mobile in the 21st century than it has ever been.

“Nevertheless, the diversity of state income tax laws places a significant burden on people who travel for work and their employers, many of which are small businesses. Currently, forty-one states tax the wages earned by a non-resident for work performed there. I do not take issue with the right of those states to impose an income tax, but I am concerned that the disparity of tax rules among those states is hurting small businesses and stifling economic growth.

“For example, some states require a nonresident to pay income tax if he or she works in that state for just one day. Other states do not collect tax until the non-resident works for a certain number of days in the jurisdiction. Small businesses must expend considerable resources just to figure out how much they must withhold for their traveling employees in forty-one different jurisdictions. Employees are also confused about when their tax liability is triggered and in which states they must file a tax return.

“To alleviate this problem, on May 12, 2011, I introduced H.R. 1864, the Mobile Workforce State Income Tax Simplification Act, with the gentleman from Georgia, Mr. Johnson. The bill we introduced establishes a clear 30-day threshold for tax liability and employer withholding. Under the bill, states remain free to set any income tax rate they choose.

“Tax simplification—on both the federal and state level—will allow workers and employers to predict their tax liabilities with accuracy and expend fewer resources researching the nuances of each state’s tax law. The money they would have spent hiring accountants and tax lawyers can then be spent on creating meaningful jobs and growing the economy.”
There has been no companion piece of legislation offered in the Senate yet, so its future there is uncertain at this time.