Commuter tax
Encyclopedia
A commuter tax is a tax
(generally on either income or wages) levied upon persons who work in a jurisdiction
, but who do not live (are not domiciled) in that jurisdiction. For example, Philadelphia has a 3.928% wage tax on residents and a 3.4985% tax on non-residents for wages earned in the city as of July 2010.
The argument for a commuter tax is that it pays for public services
, such as police, fire, sanitation
, etc., 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.
Until 1999, New York City
had a commuter tax, and there are periodic calls for its reinstatement. 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. 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, Putnam, and Dutchess counties. This tax, known popularly as the "mobility tax," is not a commuter tax, but is intended to provide funds for the Metropolitan Transportation Authority
, which transports many of the region's commuters.
The city of Washington, DC, 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, the U.S. Congress barred the city from enacting such a tax in the 1973 District of Columbia Home Rule Act
.
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
(generally on either income or wages) levied upon persons who work in a jurisdiction
Jurisdiction
Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
, but who do not live (are not domiciled) in that jurisdiction. For example, Philadelphia has a 3.928% wage tax on residents and a 3.4985% tax on non-residents for wages earned in the city as of July 2010.
The argument for a commuter tax is that it pays for public services
Public services
Public services is a term usually used to mean services provided by government to its citizens, either directly or by financing private provision of services. The term is associated with a social consensus that certain services should be available to all, regardless of income...
, such as police, fire, sanitation
Sanitation
Sanitation is the hygienic means of promoting health through prevention of human contact with the hazards of wastes. Hazards can be either physical, microbiological, biological or chemical agents of disease. Wastes that can cause health problems are human and animal feces, solid wastes, domestic...
, etc., 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.
Until 1999, New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
had a commuter tax, and there are periodic calls for its reinstatement. 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. 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, Putnam, and Dutchess counties. This tax, known popularly as the "mobility tax," is not a commuter tax, but is intended to provide funds for the Metropolitan Transportation Authority
Metropolitan Transportation Authority (New York)
The Metropolitan Transportation Authority of the State of New York is a public benefit corporation responsible for public transportation in the U.S...
, which transports many of the region's commuters.
The city of Washington, DC, 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
Maryland
Maryland is a U.S. state located in the Mid Atlantic region of the United States, bordering Virginia, West Virginia, and the District of Columbia to its south and west; Pennsylvania to its north; and Delaware to its east...
and Virginia
Virginia
The Commonwealth of Virginia , is a U.S. state on the Atlantic Coast of the Southern United States. Virginia is nicknamed the "Old Dominion" and sometimes the "Mother of Presidents" after the eight U.S. presidents born there...
. However, the U.S. Congress barred the city from enacting such a tax in the 1973 District of Columbia Home Rule Act
District of Columbia Home Rule Act
The District of Columbia Home Rule Act is a United States federal law passed on December 24, 1973 which devolved certain congressional powers of the District of Columbia to local government, furthering District of Columbia home rule...
.
See also
- Employer transportation benefits in the United StatesEmployer Transportation Benefits in the United StatesAn employer may provide transportation benefits to their employees that are tax free up to a certain limit. Under the US Internal Revenue Code section 132, the qualified transportation benefits is one of the eight types of statutory employee benefits that are excluded from gross income...
- Income taxIncome taxAn income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
- Payroll taxPayroll taxPayroll tax generally refers to two different kinds of similar taxes. The first kind is a tax that employers are required to withhold from employees' wages, also known as withholding tax, pay-as-you-earn tax , or pay-as-you-go tax...
- Wheel taxWheel TaxA wheel tax is a method of taxation commonly used in the United States by cities and counties. The problem that a wheel tax attempts to solve is that many people come into a community from outside to work - using the community's roads, water, sewer, and so forth, but pay no taxes into the...