New York v the Zoom tax

ACCORDING TO A Manhattan Institute poll, more than half of high-earning New Yorkers are working entirely from home and 44% are considering leaving the city. Ned Lamont, Connecticut’s governor, has said “the old idea of the commuter going into New York City five days a week may be an idea that’s behind us.” It does seem unlikely that the tens of thousands who commute from Mr Lamont’s state will continue to do so, or indeed the 400,000 that commute to the Big Apple from New Jersey. The region’s governors have worked well together to tackle the pandemic, but the cordialness may soon end over taxes.

When people from neighbouring New Jersey and Connecticut commute to New York to work for a New York-based employer, they must pay New York tax on the related earned income. Their home states usually offer a credit to those workers. Even those who work from home must pay New York taxes, according to the state’s “convenience of the employer” rule—unless the employee is working outside New York by necessity. Taxpayers and neighbouring states are looking closely at this loophole, as a deadly epidemic probably counts.

On December 22nd Connecticut and New Jersey filed briefs to the Supreme Court to consider a case which challenges a state’s ability to tax non-residents’ income while they are working remotely. New Hampshire filed suit...