Bacon’s Rebellion

has long promoted telework as one solution, among many, that would help address traffic congestion in Virginia. Telework makes abundant economic sense. But it may not always make political sense. What would happen, for instance, if Washington, D.C., wanted to tax the income generated by employees whose formal place of work was in D.C. but who teleworked three days a week from a location in Virginia? Double taxation would destroy an employee’s incentive to telework.

That issue hasn’t arisen here… yet. But it could, given the District’s propensity for trying to stick higher taxes on out-of-state residents.

A similar issue has, in fact, occurred in New York, which, according to Networkworld.com, “requires those who sometimes work in the office of their New York employers to pay state income taxes — not only on the income they earn while physically in New York, but also on the income they earn at home.”

A recent U.S. Supreme Court decision implicitly backed New York’s practice and opened the door for other states to start collecting a nonresident income tax. But two Connecticut senators have introduced the Telecommuter Tax Fairness Act that would undo some of the damage. U.S. Rep. Frank Wolf, from Northern Virginia, has joined the effort to get the bill passed, and the federal bureaucracy, which is promoting telework aggressively, also is behind the bill. Let us hope it passes.

(Thanks to reader and blogger Jim Duncan for passing this on.)