Officials of cities in Michigan will see a decline in income taxes from workers who now work at home because of the COVID-19 pandemic, and want a temporary amended change of the law to collect such taxes. | Pixabay
Officials of cities in Michigan will see a decline in income taxes from workers who now work at home because of the COVID-19 pandemic, and want a temporary amended change of the law to collect such taxes. | Pixabay
Officials of cities in Michigan will see a decline in income taxes from workers who now work at home because of the COVID-19 pandemic, and want a temporary amended change of the law to collect such taxes.
Under normal circumstances, employers tax their employees who work in their offices with income tax. Because of the pandemic many such employees now work from home out of the jurisdiction of the office location. Thus, those employees are no longer subject to a local (place of work) income tax.
As a result, a report in the news website Michigan Capitol Confidential (Capcon) estimated that 24 Michigan towns will collect approximately $160 million less in income taxes because of the growth of at-home (virtual) work.
Members of the Michigan Municipal League an association of cities want to amend current laws so that income taxes can be collected from non-residents who normally work within their city, but who now work from home outside the city boundary. League members have called for state legislators to make the change to the law before Dec. 31.
The tax rates imposed by 24 Michigan communities currently range from 0.5% to 2.4% (Detroit). Nonresidents customarily pay tax on income earned when they are physically present in the tax jurisdiction, the report said.
Backers of the proposal said the law-change would be temporary and only apply to those working from home as a result of the COVID-19 pandemic.
“It (pandemic) all happened so abruptly ... and has lasted so long ... that communities didn’t have time to adjust,” said Chris Hackbarth, director of state and federal affairs at the Michigan Municipal League.
However critics said it isn’t fair for people to pay for services that aren’t being delivered because of the pandemic.
“I think if anyone needs to be made whole (from COVID-related closures and economic downturns) it’s the citizens not the cities,” Leon Drolet, treasurer of the Macomb Township and director of the Michigan Taxpayers Alliance told Capcon. “They’re the ones who are being forced to pay taxes for services like closed parks and community centers - that aren’t being delivered. I can’t believe the audacity it takes to believe the cities should be made whole at the expense of citizens who have endured all kinds of suffering.”
The report concluded the prospects for an immediate decision on the matter is not likely.
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