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Q: City Tax on non-residents ( Answered,   3 Comments )
Subject: City Tax on non-residents
Category: Business and Money > Economics
Asked by: blue_heron-ga
List Price: $20.00
Posted: 18 Apr 2004 04:17 PDT
Expires: 18 May 2004 04:17 PDT
Question ID: 332065
Looking for several examples & methods of taxation by cities that levy a tax
on non-residents who work within their municipality.
Subject: Re: City Tax on non-residents
Answered By: pafalafa-ga on 18 Apr 2004 07:08 PDT
Hello blue_heron-ga,

The type of taxes you are asking about are generally known as
"commuter taxes" to emphasize their relevance to non-residents who
come in and out of a city on a regular basis, usually to commute to

A group called the National Taxpayers Union sponsored a study of such
taxes in the US in 2003.  You can see the results of their study at:

in a report called "Commuter Taxes: Milking Outsiders for All They're Worth"

(As you can see by the title, NTU isn't terribly fond of these types
of tax schemes).

The report summarizes the types of commuter taxes imposed around the country:

"...cities can and do levy taxes on outsiders if they receive
permission from their state legislature or if they have the authority
under the state constitution.  Since nothing appeals to most public
officials like forcing outsiders to foot the bill for their
government?s spending, the greatest difficulty, as far as many of them
are concerned, is that only 12 legislatures nationwide have seen fit
to allow localities to levy genuine commuter taxes..."

and provides details for individual areas:


 Occupational or ?license fees? paid in a few counties and several
cities throughout the state.
 Los Angeles and San Francisco have ?payroll expense? taxes imposed on
the employer that must be paid for each employee -- regardless of
their place of residence...
 ?Occupational Privilege Taxes? are imposed by the cities of Aurora,
Denver, and Greenwood Village on individuals employed (but not
necessarily residing) in those cities...
 ...Wilmington imposes an ?Earned Income Tax?...of 1.25%.
 Chicago charges an ?Employers? Expense Tax? to businesses of 50
employees or more who do 50% or more of their work in Chicago....
 Counties are authorized to charge several wage taxes; rates vary.
 Lexington and Louisville (and their counties) both impose commuter
taxes in excess of 2%.
 Cities may impose a tax of .5% on non-residents...
 Kansas City and St. Louis charge a 1% commuter tax.
New Jersey
 Municipalities with more than 200,000 people may impose a payroll tax
at the rate of 1%....

New York
 Yonkers charges a .25% commuter tax.
 All cities and villages are permitted to charge a commuter tax up to 1%... 
 [localities] are permitted to impose earned income taxes of up to 1%
on employee wages regardless of residency...Philadelphia and
Pittsburgh charge their commuter wage taxes under separate provisions.

I hope this is the information you need, but if you have any questions
about this, please let me know before rating this answer.  Just post a
Request for Clarification, and I'll be happy to assist you further.



search strategy:  Google search on: [ commuter tax ]

Request for Answer Clarification by blue_heron-ga on 18 Apr 2004 07:52 PDT
Hello pafala-ga

Thank you for the information as it relates to the US.

May I offer you a tip for similar information from Canada and/ or
other parts of the world?


Request for Answer Clarification by blue_heron-ga on 18 Apr 2004 09:13 PDT
Enjoy your Spring day!

Clarification of Answer by pafalafa-ga on 18 Apr 2004 17:15 PDT
Hello again,

Well, I'm back in action, a bit sun-burnt, and looking for commuter
tax information.

From what I can tell, this issue is not much of an issue outside the
U.S.  Not that commuters aren't sometimes taxed in other
jurisdictions.  It's more that they don't (as far as I can tell, thus
far) make a big deal out of it one way or the other.

Have a look at this link below:

from the Manitoba Business Information Service regarding the Manitoba payroll tax.

As the site makes clear, everyone who is employed in Manitoba at any
business above a certain size, is assessed a payroll tax (rather...the
employer is assessed the tax, but this is something the NTU in the US
considers a "commter tax" as well).

As far as I can see, anyone commuting into a job from outside of
Manitoba would nonetheless be assessed this tax as well.

Is this the type of thing that you're inquiring about?  If so, my
guess is that it is in fairly routine use, but it would take more
research to really clarify the extent of it.  It's a provincial rather
than city tax, so I don't know if it fits your needs.

And if this information isn't on target, let me know a bit more
precisely what you need, and I'll see if I can drum it up.



Request for Answer Clarification by blue_heron-ga on 18 Apr 2004 19:51 PDT
Hello pafalafa-ga

I checked out Manitoba's: A tax paid by employers on remuneration paid
to their employees in Manitoba.

My desire is for more "commuter tax" examples worldwide similar to
those listed from the United States. The NTU link provided in your
answer contained very interesting US information especially through
the subsequent links within and the many articles: "New York City
Mayor Michael Bloomberg has been the most vocal supporter of commuter

My guess is that around the world there must be other cities that find
ways to tax commuting workers.


Clarification of Answer by pafalafa-ga on 19 Apr 2004 11:21 PDT
Hello again,

I'm still checking into this, and I have some queries out which may
(or may not!) yield some useful information.

It will probably be a few days before I hear back from various
sources, so hang tight, and I'll give you an update as soon as I have
any additional information.


Request for Answer Clarification by blue_heron-ga on 20 Apr 2004 04:09 PDT
Thanks for sending out the enquiries.

Clarification of Answer by pafalafa-ga on 20 Apr 2004 07:40 PDT

Your request for non-US information on this topic turned out to be
unexpectedly tough.  There simply does not seem to be any discussion
of the issue of "commuter taxes" outside the context of cities in the

I've contacted a number of my research colleagues in countries around
the world, and none of them are aware of specific municipal income
taxes focused on commuters.

In fact, a Canadian report on revenue-generating strategies for
cities, recommends that income is most-effectively collected from
commuters via a sales tax.  To the extent that the report discusses
non-resident income taxes, it is exclusively from examples in the U.S.

The 2003 report is "Special Study: New Finance Options for Municipal
Governments" and can be found here:

There is discussion of commuter taxes throughout the report, such as
this passage here:

(page 4) "...Municipal governments should finance services that
benefit local residents from taxes such as property taxes and income
taxes that are borne by local residents. For services that benefit
commuters and visitors, other  taxes, such as sales taxes and hotel
and motel occupancy taxes, may be more appropriate..."

or this one:

(page 21)  "...A significant change came in 1941 when the provinces
entered into the wartime tax rental agreement with the federal
government, temporarily surrendering their right and the right of
their municipalities to levy income taxes. Since that time, no
municipality in Canada has been able to levy an income tax.

A major advantage of a municipal income tax is its revenue elasticity. A further
advantage of an income tax on payrolls is that it taxes commuters, permitting a
municipality to tax those individuals who use city services but do not
pay for them under the property tax.  Some US cities tax commuters
through a payroll tax..."


So you can local taxes in Canada (I suspect the same is the
case in many other countries) and no mention or studies of commuter
taxes other than those in the U.S.

I would have liked to have found a more definitive answer.  But from
all appearances, it seems that explicit commuter taxes levied by
cities may be a strategy that is unique to a number of municipalities
in the U.S.

I hope this information fully meets your needs.  

Subject: Re: City Tax on non-residents
From: nelson-ga on 18 Apr 2004 07:15 PDT
New York City does (or at least, did).  There was much controversy
involving NJ and CT and the tax may have been repealed or limited to
just NYS residents.  Not sure of the entrie history, though.
Subject: Re: City Tax on non-residents
From: pafalafa-ga on 18 Apr 2004 07:56 PDT

Thanks for the fast feedback.  I'll see what I can dig up on non-US
countries, but I have one foot out the door, at the moment, on one of
the first really beautiful spring days here.  So be patient.  I'll try
to get back to this in the evening.

Subject: Re: City Tax on non-residents
From: blue_heron-ga on 18 Apr 2004 09:11 PDT
Thank you for your comments nelson-ga and pafalafa-ga.

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