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Lamont proposal encourages remote workers living in CT to challenge NY tax laws

Governor Ned Lamont delivers his State of the State address on Wednesday, February 7.
Molly Ingram
Governor Ned Lamont delivers his State of the State address on Wednesday, February 7.

Connecticut Gov. Ned Lamont has called on Connecticut residents working remotely for New York companies to challenge New York’s tax laws.

It’s in an attempt to claw back tax money that Lamont believes should be going to Connecticut.

“I think we’re defending our Connecticut citizens,” Lamont said. “You live in Connecticut, you work in Connecticut, why are you paying New York taxes? We’re going to stand with our taxpayers, see if they get a little justice.”

Office of Policy and Management Secretary Jeffery Beckham explained the proposals to reporters during a budget briefing on Wednesday, calling the current tax laws “an unconstitutional overreach by the state of New York.”

“They will, if they win, receive a refund from New York and then receive a one-time 50% credit when they have to turn around and pay taxes to Connecticut,” Beckham said. “It covers for three completed tax years, 2020 to 2023.”

If they were successful, challengers would receive a refund from New York and would owe money to Connecticut. But Lamont’s proposal would give them a 50% tax break on that, as well as waiving any penalty and interest associated with the challenge.

Beckham said he believes the proposal would benefit Connecticut and the state’s remote workers, but it will be challenging.

“This would have to go to federal court, it would likely go to the U.S. Supreme Court, likely take many years, but the benefit would be $200 million to the general fund one day, and they would have a lower tax rate,” Beckham said.

Chris Davis, vice president of Public Policy at the Connecticut Business and Industry Association, said the CBIA supports the bill — which he believes has the potential to bring people to work for Connecticut businesses.

“The benefits to the state of Connecticut would be huge,” Davis said. “Over $200 million a year of sourced income taxed here in Connecticut, as well as the encouragement for those individuals to work here remotely as well as live here and spend their money here in Connecticut.”

“We’ve seen over the years and some studies have shown that individuals that work remotely that live in a different state often transition to employers within their own state where they live within a few years of that remote work,” he added.

The New York Department of Taxation had no comment on the proposal.

Molly is a reporter covering Connecticut. She also produces Long Story Short, a podcast exploring public policy issues across Connecticut.