Commuter tax

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.

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.

See also

• Income tax
• Payroll tax
• Wheel tax