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How common is municipal Income Tax?

Started by roadman65, August 20, 2021, 10:48:18 AM

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roadman65

When we lived in New Jersey my dad worked on Staten Island. Ever year at tax time he had to file a return also with the City of New York in addition to Uncle Sam due to NYC having income taxed even on non residents.

Where else (are there any) impose a municipal income tax?
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JayhawkCO

Kansas City, MO has one.

Here we have a special tax if you're in the RTD (Regional Transportation District).

Chris

catch22

Several cities in Michigan:

Albion, Battle Creek, Benton Harbor, Big Rapids, East Lansing, Flint, Grayling, Hamtramck, Hudson, Ionia, Jackson, Lansing, Lapeer, Muskegon, Muskegon Heights, Pontiac, Port Huron, Portland, Springfield and Walker all tax a a 1% rate for residents, 0.5% for non-residents. These cities tax at a higher rate: Detroit (2.4% / 1.2%), Grand Rapids (1.5% / 0.75%), Highland Park (2% / 1%), and Saginaw (1.5% / 0.75%).

GaryV

And with increased Work From Home, many cities' tax collections are lagging.  Because if you're not a resident and not physically working in the city, you don't have to pay.  Even if your employer's physical location is in one of the cities.

SectorZ

Quote from: GaryV on August 20, 2021, 05:20:46 PM
And with increased Work From Home, many cities' tax collections are lagging.  Because if you're not a resident and not physically working in the city, you don't have to pay.  Even if your employer's physical location is in one of the cities.

That surprises me, because my state has been robbing New Hampshire residents who work from home with Massachusetts-based businesses, with federal court approval of said taxation.

JayhawkCO

Quote from: GaryV on August 20, 2021, 05:20:46 PM
And with increased Work From Home, many cities' tax collections are lagging.  Because if you're not a resident and not physically working in the city, you don't have to pay.  Even if your employer's physical location is in one of the cities.

Good call.  The company I work for is based out of Kansas City, MO, so now I don't have to pay their tax.

Chris

GaryV

I was replying specifically to the list of Michigan cities before my post.  YMMV in other states.

I used to work for Chrysler in Highland Park.  One year we had some training classes in Farmington Hills.  We could deduct those work weeks from our HP income tax - and could deduct our vacation weeks as well.

wanderer2575

Pretty much every burg in Pennsylvania and Ohio.  PLUS those states also have school district taxes, based on residency.

Many counties in Indiana and Kentucky have either income taxes or wage taxes.

Revive 755

St. Louis, MO has (had?) one. IIRC it was called the earnings tax.

jp the roadgeek

Ohio has the RITA system for local income taxes.  NYC and Yonkers also have one. 
Interstates I've clinched: 97, 290 (MA), 291 (CT), 291 (MA), 293, 295 (DE-NJ-PA), 295 (RI-MA), 384, 391, 395 (CT-MA), 395 (MD), 495 (DE), 610 (LA), 684, 691, 695 (MD), 695 (NY), 795 (MD)

empirestate

Quote from: roadman65 on August 20, 2021, 10:48:18 AM
When we lived in New Jersey my dad worked on Staten Island. Ever year at tax time he had to file a return also with the City of New York in addition to Uncle Sam due to NYC having income taxed even on non residents.

He'd actually have filed that return with the state, not the city. NYC and Yonkers taxes are both collected on the state return.

To your question, we paid municipal income taxes when I lived in Allegheny County, PA. The city of Pittsburgh had its own tax return, but for the Town of McCandless (not a town), I think we just had to go in someplace and slip them the ten bucks. Although that was actually a school district tax, if I'm not mistaken–just one that is levied by and apportioned to the different municipalities.

Scott5114

Not a thing I've heard of in Oklahoma. I don't know if it's even legal here. The only reason I knew it was a thing elsewhere is because W-2s are issued in four parts (one for the employee's records, one to be filed with the 1040, one for the state, and then one extra copy.
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hbelkins

Quote from: wanderer2575 on August 20, 2021, 05:31:46 PM
Pretty much every burg in Pennsylvania and Ohio.  PLUS those states also have school district taxes, based on residency.

Many counties in Indiana and Kentucky have either income taxes or wage taxes.

Counties and cities in Kentucky can levy what's called a payroll tax or an occupational tax. It's a flat percentage that's deducted from your paycheck before you ever receive it. No forms to fill out, no possibility of deductions or exemptions. It's levied on those who work within the city limits or county boundaries, depending on which entity passes the tax. And it's levied on you no matter if you live in that taxing jurisdiction or not. I pay a payroll tax to the city of Jackson even though I do not live in the same county where Jackson is located.

That's one advantage I had of working from home (mostly) for more than a year. Since my county doesn't levy a payroll tax, I didn't have to pay it because I wasn't physically working in the city of Jackson. I had to guesstimate how much time I spent at home vs. how much time at the office. Since I was only going in once every other week for just a couple of hour to check mail, check in with the boss, etc., I put 95-5 as my time split between home and the office. So it amounted to a de facto 2 percent increase in my take-home pay.


Government would be tolerable if not for politicians and bureaucrats.

1995hoo

I wouldn't be surprised if the reason New York State lets New York City levy a municipal income tax has something to do with various services the city provides its residents that are apparently state-level services elsewhere in New York. I don't remember all what they were, but I read an article that talked about how the various municipal services are a major reason for the city's constant budget strains. Only thing is, Yonkers also levies a municipal income tax and I don't believe they have nearly the same issues.

If you live outside New York State but work within the state, or have income derived from New York sources, the state is quite aggressive about collecting income tax. If you're a partner in a business that has a location in New York State but you work elsewhere, you owe New York State income tax based on the percentage of the business's income that comes from the New York location(s) because the New York partnership law deems that percentage of your income to be from New York sources. (So, for example, if 31% of the business's income is from the New York locations, you do your federal taxes first, then you do your New York taxes using the nonresident form and you apply a 31% factor to your overall income, and then you do your home state taxes and claim a credit for what you paid New York to the extent they allow it.) If you work for a business located in New York and you telecommute from elsewhere, you owe new York income tax even if you don't enter New York all year if the telecommute arrangement is for your convenience or for the convenience of the employer and is not actually "required."

I believe the New York City and Yonkers income taxes are imposed only on city residents, however. The New York tax forms, including the withholding form, always ask if you are a resident of either of those municipalities or were at any point during the year, even the nonresident forms. If you're not, they don't ding you for municipal income tax. At a former job I used to have to pay New York State income tax under the "percentage" system described above, but as a Virginia resident I didn't have to pay city tax even though our New York office was in Midtown Manhattan.
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wanderer2575

Quote from: SectorZ on August 20, 2021, 05:25:00 PM
Quote from: GaryV on August 20, 2021, 05:20:46 PM
And with increased Work From Home, many cities' tax collections are lagging.  Because if you're not a resident and not physically working in the city, you don't have to pay.  Even if your employer's physical location is in one of the cities.

That surprises me, because my state has been robbing New Hampshire residents who work from home with Massachusetts-based businesses, with federal court approval of said taxation.


https://www.ey.com/en_us/financial-services/tax/working-remotely-making-the-convenience-rule-work-for-telecommuting

Quote
On October 19, 2020, New Hampshire filed an original jurisdiction suit against Massachusetts in the United States Supreme Court, challenging Massachusetts' taxation of New Hampshire residents who telecommute to Massachusetts during the COVID-19 pandemic.  New Jersey and Connecticut filed a joint amicus brief asking the Court to rule the scheme unconstitutional, citing their loss of revenue to New York.

It is unclear how this case will proceed.  In 2004, the United States Supreme Court had a chance to weigh in on New York's convenience rule but declined to do so.  On January 25, 2021, the Supreme Court expressed more interest in this case, asking the solicitor general of the United States to provide the federal government's position on New Hampshire's current challenge.  While this suggests the Court is at least considering the challenge and that the convenience rule may be declared unconstitutional, the odds of a successful challenge likely decreased as the solicitor general filed a brief on May 25, 2021, recommending that the Court reject New Hampshire's challenge.



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