Connecticut senators propose ending double tax penalty for telecommuters

The two U.S. senators from Connecticut on Monday introduced a bill that would end the ability of any state to tax income earned by telecommuters who are not physically located in that state.

Sens. Joe Lieberman (I) and Richard Blumenthal (D) said the Telecommuter Tax Fairness Act, S. 1811, would help encourage telecommuting, which could create jobs, relieve traffic congestion and reduce the demand for gasoline.

"Although most states tax telecommuters on the percentage of time worked within that state, a few other states tax 100 percent of the income of nonresident teleworking employees whose companies are based in their state, regardless of the amount of time they are physically present in that state," the two senators said.

"Consequently, because telecommuters' home states can also tax the income earned at home, workers nationwide are threatened with double taxation on that income," they added. "This double tax risk puts telecommuting out of reach for many Americans."

Connecticut in particular feels the sting of the double tax, given its proximity to New York and the increased use of the telecommuting alternative. Telecommute Connecticut, an advisory group that assists employers and employees, has been reported as saying that roughly 9 percent of Connecticut residents telecommute, which removes tens of thousands of cars from the roads every day.