With more residents working from home during the pandemic, lawmakers are considering whether New Jersey’s tax policies should change and they want to study whether this shift could have other implications for the state economy.
Legislation approved by a key Senate committee last week calls for a special commission to study ways that the big shift to remote work during the coronavirus health crisis has affected issues like overtime, worker retention and productivity.
The review that would be launched under the bill would also look at what impact working remotely has had on employees, including with managing things like child care and workplace stress.
And while the push to conduct a major study was prompted by the pandemic, the panel would also look at what companies may be seeking to do once the health crisis is over and offices are able to safely reopen.
‘Advantages and disadvantages of remote working’
“It seeks to look at the advantages and disadvantages of remote working, what has worked, and what hasn’t,” said Michael Egenton, executive vice president of the New Jersey Chamber of Commerce.
New Jersey has been among the states that have been hit hard by the pandemic, with more than 20,000 deaths linked to COVID-19 infections.
The health crisis has also triggered an economic downturn that has led to a rise in the state’s unemployment rate, and the failure of many businesses, including small businesses.
Stay-at-home orders and other restrictions put in place to slow the rate of new infections have affected other businesses and their workers, including in the retail and food-service industries. Many have erected plexiglass barriers and made other layout changes to protect workers and customers.
But many other companies have been able to use improving technology like videoconferencing software to shift almost entirely to remote working. For those companies and their employees, the pandemic has enabled them to stay on the job and largely maintain productivity.
Egenton shared with lawmakers last week some feedback from New Jersey Chamber of Commerce members who’ve shifted to a remote work setting during the pandemic — something he described as the “new world that we’re in.”
He also predicted a lot of businesses coming out of the pandemic will take a new look at their own physical locations now that they’ve had the chance to see what it’s like to have workers putting in significant hours at home.
“Obviously, a lot of our employers are going to reevaluate that, whether they need the full contingent of employees at their place of work,” Egenton said as he testified before the Senate Labor Committee.
Input from business groups, labor department
Under the bill that would establish an official Remote Work Study Commission, representatives from Egenton’s organization and other business-lobbying groups would be among those asked to serve on what would be an 11-member panel.
The commissioner of the state Department of Labor and Workforce Development would also participate in the review, as would individuals with expertise in areas like “professional, desk, managerial, or administrative work,” according to the bill.
Members of the Legislature would also serve on the panel, with all selections made by the Assembly speaker and Senate president.
The panel would be tasked with issuing a final report of its evaluation of whether the “advantages of remote work exceed its disadvantages (and) whether remote work has positive effects on the productivity of workers,” according to the bill.
The report must be issued to the governor and legislative leaders within one year of the panel’s first meeting.
Last year, lawmakers advanced legislation that calls for the Department of Treasury to study, among other issues, the potential tax implications of the shift to remote work for New Jersey residents and the state budget.
That effort was launched in part in response to concerns about double taxation since many New Jersey residents who work for companies with offices in New York have been working from home for a prolonged period during the health crisis.
New Jersey has a long-standing reciprocal agreement with neighboring Pennsylvania that allows commuters in each state to pay income taxes where they live and not where they work. But no such pact exists between New Jersey and New York.
Moreover, officials in New York have continued to view the income earned by employees of New York companies who may be working from home in New Jersey as subject to its tax laws, even though New Jersey’s tax laws generally dictate that income is “sourced based on where the service or employment is performed.”
In December, New Jersey Attorney General Gurbir Grewal filed a brief seeking to join an ongoing legal battle over similar taxation issues that is currently playing out in the U.S. Supreme Court between Massachusetts and New Hampshire.
“This case has a major impact for our state’s bottom line, especially during a pandemic, when unprecedented numbers of employees have been working from home,” Grewal said at the time. “We hope that the Supreme Court will agree to resolve this issue of nationwide importance.”