New Jersey's 24th Legislative District

Senator Steven Oroho

Senator Steve Oroho

Oroho: Murphy Not Doing Enough to End New York’s Unfair Taxation of New Jersey Residents

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NJ Still Advising Employers to Withhold Tax Payments for NY for Remote Work

Senator Steven Oroho said Governor Phil Murphy isn’t doing enough to end New York’s unfair taxation of former commuters who now work from home in New Jersey some or all of the time.

Sen. Steven Oroho said Gov. Phil Murphy isn’t doing enough to end New York’s unfair taxation of former commuters who now work from home in New Jersey some or all of the time. (Pixabay)

“The pandemic accelerated a shift to remote work that resulted in many New Jersey residents working from home rather than crossing the Hudson every day,” said Oroho (R-24). “While those workers should be paying tax to New Jersey at our lower rates for work performed in this state, the Murphy administration continues to advise their employers to withhold and remit income taxes for all work to New York. It’s a massive giveaway that makes absolutely no sense.”

Since last year, Oroho has urged the Murphy administration to take a stand against New York’s unfair taxation of New Jersey workers. He said New Jersey could realize $1 billion or more annually in new tax revenues while many workers could have their state tax bills cut in half due to New Jersey’s lower rates at many income levels.

“It’s no surprise that New York doesn’t want to give up the billions of dollars of tax revenue it’s stealing from New Jersey,” said Oroho. “The surprise is that Governor Murphy is complicit in this theft. He’s telling employers to do whatever New York tells them to do, even though it hurts New Jersey and our residents. It’s unbelievable.”

Based on their positive experiences with telecommuting during the pandemic, many employers have announced plans to make remote or hybrid work arrangements permanent for their workforces.

Oroho noted that many New York employers are in the process of closing offices and downsizing office space in a reflection of the permanent shift to remote work for many of their workers.

“With offices getting smaller, many former commuters won’t even have desks to return to in New York,” said Oroho. “If the infrastructure and service demands of those workers is shifting from New York to New Jersey, the supporting tax dollars should shift here too. New York’s ‘convenience of the employer’ rule may have made sense in the era of typewriters and wall phones, but it doesn’t make sense when a worker with a cell phone and the Internet can do their job from their dining room table. Times have changed and our tax rules need to be modernized to reflect that.”

Despite this permanent shift to remote work, New York continues to insist that it is owed income taxes for all work performed by New Jersey residents whose employers are based in New York, even if those workers never leave their homes.

Oroho expressed concern that the Murphy administration continues to back New York’s position with guidance from the New Jersey Division of Taxation advising that “during the temporary period of the COVID-19 pandemic, wage income will continue to be sourced as determined by the employer in accordance with the employer’s jurisdiction.”

“This situation will never be resolved to the benefit of New Jerseyans if Governor Murphy continues to roll over and play dead,” said Oroho. “Until we fight back, this unfair taxation by New York will never end. The Murphy administration should start by directing employers to apportion earnings and income tax withholdings to New Jersey for work performed here by our residents. Further, Governor Murphy should draw a line in the sand with Governor Cuomo and make clear that New Jersey is prepared to make our own case before the United States Supreme Court if necessary.”

This morning, the United States Supreme Court declined to consider a limited case filed by New Hampshire against Massachusetts regarding the temporary tax treatment of income earned remotely during the pandemic, which is coming to an end.

Governor Murphy has suggested that he was hoping the outcome of that case would help resolve the New York tax issue.

“The Supreme Court may not have wanted to issue a ruling on a temporary matter that might be resolved on its own,” added Oroho. “That doesn’t mean a direct challenge by New Jersey of New York’s perpetual taxation of remote work arrangements that have become permanent would be rejected. I would suggest it’s time for Governor Murphy to stop hiding behind others and start defending New Jerseyans on his own.”

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