HARDYSTON – Unfair tax schemes can unite both parties and that was the case today when Democratic Congressman Josh Gottheimer and Republican state Senator Steve Oroho came together to complain about how New York is taxing Jersey workers.
The pandemic is driving the immediate issue, and as Oroho put it, “New York has been very aggressive going after our residents.”
He was joined by Gottheimer on a lovely day outside town hall in this bucolic Sussex County municipality.
Gottheimer needs no prodding to go after “moocher” states, but that list is normally limited to locales in the south and west. But today, New York City moved into the “moocher” category.
What’s the problem?
The status quo has been for the estimated 400,000 Jersey residents who work in New York to pay income taxes to New York. The thinking is, that is where they earn their money.
But then came the pandemic, which has resulted in many of those employees now working at home – remotely.
So, why should these residents pay income taxes to New York if they are no longer going there every work day? That’s what Gottheimer and Oroho are asking.
This is more than an esoteric concern.
New York’s tax rates tend to be higher than they are in Jersey, so the bipartisan duo calculated that workers earning $50,000 a year pay about $1,500 more to New York than they would to New Jersey. If someone is lucky enough to make $200,000 a year, the difference is more than $8,500.
There’s more. The officials estimated that if workers paid taxes to New Jersey, albeit at a lower rate, it would still mean $1.2 billion more coming into the state treasury. They proposed putting that money into the property tax relief fund.
Logically, this situation doesn’t only confront New Jersey. It can impact any state with suburban areas surrounding a central city across state lines.
That is why both litigation and legislation to stop the so-called injustice is pending with the courts and Congress. But the judicial and legislative process takes time.
Neither Gottheimer nor Oroho want to wait. They are asking the IRS to issue a ruling to do away with the state practice of taxing, in effect, workers in absentia.
But wait a minute.
The pandemic is going to end – eventually. So, won’t New Jersey workers resume commuting to the city, thereby making the problem moot?
Both insisted this is a continuing issue, because many employees will continue working remotely.
And in Jersey.