Commuter tax

Last updated

A commuter tax is a tax (generally on either income or wages) levied upon persons who work, but do not live, in a particular jurisdiction. The argument for a commuter tax is that it pays for public services, such as police, fire, and sanitation, received by and beneficial to people who work within the jurisdiction levying the commuter tax. Arguments against such a tax are that it acts as an incentive for businesses to relocate outside of the jurisdiction, along with their residents. [1] In some cases, individual cities may be barred from enacting a commuter tax even though the state governments may impose a non-resident income tax. States may choose to enter "reciprocal tax agreements" to exempt non-residents from some local taxes. [2]

Until 1999, New York City had a commuter tax, and there are periodic calls for its reinstatement. [3] [4] [5] A commuter tax in New York City would have to have support from the State Legislature in order for reinstatement, and since the majority of state legislators represent people who do not live in New York City, the tax tends to be unpopular. [6]

While the city of New York is barred from charging its own commuter tax, the state of New York does impose an income tax on non-residents that work in the state. [7] In 2009, New York enacted the Metropolitan Commuter Transportation Mobility Tax, a 0.34% levy on payrolls and self-employment earnings in New York City and Nassau, Suffolk, Westchester, Rockland, Orange, Putnam, and Dutchess counties. This tax, known popularly as the "mobility tax", or the "MTA tax", is intended to provide funds for the Metropolitan Transportation Authority, which transports many of the region's commuters. [8]

Philadelphia has a 3.924% wage tax on residents and a 3.495% tax on non-residents for wages earned in the city as of August 2013. [9]

Washington, D.C., has sought to enact a commuter tax to recover costs of providing city services to the approximately 300,000 people who commute to the city from suburban Maryland and Virginia. However, in the 1973 District of Columbia Home Rule Act, the U.S. Congress barred the city from enacting such a tax . [10]

See also

Related Research Articles

Tax Compulsory charge imposed by government

A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer by a governmental organization in order to fund government spending and various public expenditures, and tax compliance refers to policy actions and individual behaviour aimed at ensuring that taxpayers are paying the right amount of tax at the right time and securing the correct tax allowances and tax reliefs.

Taxation in the United States

The United States of America has separate federal, state, and local governments with taxes imposed at each of these levels. Taxes are levied on income, payroll, property, sales, capital gains, dividends, imports, estates and gifts, as well as various fees. In 2020, taxes collected by federal, state, and local governments amounted to 25.5% of GDP, below the OECD average of 33.5% of GDP. The United States had the seventh-lowest tax revenue-to-GDP ratio among OECD countries in 2020, with a higher ratio than Mexico, Colombia, Chile, Ireland, Costa Rica, and Turkey.

An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them. Income tax generally is computed as the product of a tax rate times the taxable income. Taxation rates may vary by type or characteristics of the taxpayer and the type of income.

Payroll tax Tax imposed on employers or employees

Payroll taxes are taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their employees. By law, some payroll taxes are the responsibility of the employee and others fall on the employer, but almost all economists agree that the true economic incidence of a payroll tax is unaffected by this distinction, and falls largely or entirely on workers in the form of lower wages. Because payroll taxes fall exclusively on wages and not on returns to financial or physical investments, payroll taxes may contribute to underinvestment in human capital such as higher education.

Taxation in Canada is a prerogative shared between the federal government and the various provincial and territorial legislatures.

A corporate tax, also called corporation tax or company tax, is a direct tax imposed on the income or capital of corporations or analogous legal entities. Many countries impose such taxes at the national level, and a similar tax may be imposed at state or local levels. The taxes may also be referred to as income tax or capital tax. A country's corporate tax may apply to:

Tax exemption is the reduction or removal of a liability to make a compulsory payment that would otherwise be imposed by a ruling power upon persons, property, income, or transactions. Tax-exempt status may provide complete relief from taxes, reduced rates, or tax on only a portion of items. Examples include exemption of charitable organizations from property taxes and income taxes, veterans, and certain cross-border or multi-jurisdictional scenarios.

Although the actual definitions vary between jurisdictions, in general, a direct tax or income tax is a tax imposed upon a person or property as distinct from a tax imposed upon a transaction, which is described as an indirect tax. There is a distinction between direct and indirect tax depending on whether the tax payer is the actual taxpayer or if the amount of tax is supported by a third party, usually a client. The term may be used in economic and political analyses, but does not itself have any legal implications. However, in the United States, the term has special constitutional significance because of a provision in the U.S. Constitution that any direct taxes imposed by the national government be apportioned among the states on the basis of population. In the European Union direct taxation remains the sole responsibility of member states.

State income tax Form of taxation in the United States

Most individual U.S. states collect a state income tax in addition to federal income tax. The two are separate entities. Some local governments also impose an income tax, often based on state income tax calculations. Forty-two states and many localities in the United States impose an income tax on individuals. Eight states impose no state income tax, and a ninth, New Hampshire, imposes an individual income tax on dividends and interest income but not other forms of income. Forty-seven states and many localities impose a tax on the income of corporations.

In the United States, the jock tax is the colloquially named income tax levied against visitors to a city or state who earn money in that jurisdiction. Since a state cannot afford to track the many individuals who do business on an itinerant basis, the ones targeted are usually very wealthy and high profile, namely professional athletes. Not only are the working schedules of famous sports players public, so are their salaries. The state can compute and collect the amount with very little investment of time and effort.

Tax withholding, also known as tax retention, Pay-as-You-Go, Pay-as-You-Earn, or a Prélèvement à la source, is income tax paid to the government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient. In most jurisdictions, tax withholding applies to employment income. Many jurisdictions also require withholding taxes on payments of interest or dividends. In most jurisdictions, there are additional tax withholding obligations if the recipient of the income is resident in a different jurisdiction, and in those circumstances withholding tax sometimes applies to royalties, rent or even the sale of real estate. Governments use tax withholding as a means to combat tax evasion, and sometimes impose additional tax withholding requirements if the recipient has been delinquent in filing tax returns, or in industries where tax evasion is perceived to be common.

Sales taxes in the United States Overview of sales taxes in the United States of America

Sales taxes in the United States are taxes placed on the sale or lease of goods and services in the United States. Sales tax is governed at the state level and no national general sales tax exists. 45 states, the District of Columbia, the territories of Puerto Rico, and Guam impose general sales taxes that apply to the sale or lease of most goods and some services, and states also may levy selective sales taxes on the sale or lease of particular goods or services. States may grant local governments the authority to impose additional general or selective sales taxes.

Income taxes in the United States are imposed by the federal government, and most states. The income taxes are determined by applying a tax rate, which may increase as income increases, to taxable income, which is the total income less allowable deductions. Income is broadly defined. Individuals and corporations are directly taxable, and estates and trusts may be taxable on undistributed income. Partnerships are not taxed, but their partners are taxed on their shares of partnership income. Residents and citizens are taxed on worldwide income, while nonresidents are taxed only on income within the jurisdiction. Several types of credits reduce tax, and some types of credits may exceed tax before credits. An alternative tax applies at the federal and some state levels.

Taxation in Australia Overview of taxation in Australia

Income taxes are the most significant form of taxation in Australia, and collected by the federal government through the Australian Taxation Office. Australian GST revenue is collected by the Federal government, and then paid to the states under a distribution formula determined by the Commonwealth Grants Commission.

Tax protesters in the United States have advanced a number of arguments asserting that the assessment and collection of the federal income tax violates statutes enacted by the United States Congress and signed into law by the President. Such arguments generally claim that certain statutes fail to create a duty to pay taxes, that such statutes do not impose the income tax on wages or other types of income claimed by the tax protesters, or that provisions within a given statute exempt the tax protesters from a duty to pay.

Taxation in the British Virgin Islands is relatively simple by comparative standards; photocopies of all of the tax laws of the British Virgin Islands would together amount to about 200 pages of paper.

An employer in the United States may provide transportation benefits to their employees that are tax free up to a certain limit. Under the U.S. Internal Revenue Code section 132(a), the qualified transportation benefits are one of the eight types of statutory employee benefits that are excluded from gross income in calculating federal income tax. The qualified transportation benefits are transit passes, vanpooling, bicycling, and parking associated with these things.

Tax protesters in the United States advance a number of constitutional arguments asserting that the imposition, assessment and collection of the federal income tax violates the United States Constitution. These kinds of arguments, though related to, are distinguished from statutory and administrative arguments, which presuppose the constitutionality of the income tax, as well as from general conspiracy arguments, which are based upon the proposition that the three branches of the federal government are involved together in a deliberate, on-going campaign of deception for the purpose of defrauding individuals or entities of their wealth or profits. Although constitutional challenges to U.S. tax laws are frequently directed towards the validity and effect of the Sixteenth Amendment, assertions that the income tax violates various other provisions of the Constitution have been made as well.

Taxation in California Overview of taxation in the U.S. state of California

Taxes in California are among the highest in the United States and are imposed by the state and by local governments.

Taxes in Germany are levied by the federal government, the states (Länder) as well as the municipalities (Städte/Gemeinden). Many direct and indirect taxes exist in Germany; income tax and VAT are the most significant.

References

  1. ↑ Gessing, Paul (June 18, 2003). "Commuter Taxes: Milking Outsiders for All They're Worth". NTUF Policy Paper 141. Archived from the original on September 28, 2007. Retrieved March 13, 2008.
  2. ↑ Ditmer, Robert W. "State Tax Reciprocal Agreements". Payroll-Taxes.com. Retrieved July 10, 2012.
  3. ↑ McMahon, E.J. "Wrong Time For A Commuter Tax" . Retrieved March 13, 2008.
  4. ↑ Moynihan, Colin (November 23, 2008). "Proposal to Raise Car Fees". The New York Times . Retrieved April 30, 2010.
  5. ↑ "Tax commuters to defray New York City costs". February 16, 2011.
  6. ↑ "The Commuter's Fair Share". The New York Times. December 9, 2002. Retrieved March 13, 2008.
  7. ↑ Noonan, Timothy P. (February 26, 2010). "The Ins and Outs of New York Nonresident Allocation Issues". State Tax Notes. Hodgson Russ LLP. Retrieved July 10, 2012.
  8. ↑ "Metropolitan Commuter Transportation Mobility Tax" (PDF), Weiser Tax, May 2009, archived from the original (PDF) on April 17, 2012
  9. ↑ "Philadelphia Department of Revenue" . Retrieved August 21, 2013.
  10. ↑ Eric M. Weiss, D.C.'s Bid To Impose Commuter Tax Denied, The Washington Post , Saturday, November 5, 2005; Page A01


This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.