Vol. 49, No. 3

In this edition

The rise of ISIS. The expansion of China. The very real danger that Russia poses to the West. With the possible exception of China, these threats were unimaginable before 9/11. Yet today, they represent perhaps the three greatest challenges we face around the world.

Putin’s Push for Power

In 2009, the Obama administration “reset” relations with Russia, an attempt at unilateral withdrawal and concession to gain cooperation from Vladimir Putin’s regime. Unfortunately, the reset has proved to be a miserable failure because Putin respects only strength.

Is Time Working for or Against Putin?

Even though Vladimir Putin faces no political opposition at home, he is presiding over a troubled economy that would keep any politician up at night. What ails the Russian economy? Take your pick.

Separating Fact from Fiction

As Russia attacks the post-World War II security structure, Radio Free Europe/Radio Liberty is cutting through the haze of propaganda to make sure the truth is told and the message of freedom and democracy is promoted in oppressed regions of the world.

The War on ISIS: Getting Beyond Stalemate

One year after the President announced a campaign to “degrade and destroy” the Islamic State of Iraq and al-Sham, an examination of what the campaign has — and has not — achieved, and what more needs to be done to restore some semblance of order in the Middle East.

Why the Stakes are so High in the South China Sea

The South China Sea lies at the nexus of a global economy on which the prosperity of all major trading nations depends, which is why China’s expansion in the region is so alarming, and why the United States must stand with its allies and partners across the region.

The Price of Our Security

In the face of growing budget constraints, lawmakers must find a way to bridge the partisan divide and reach agreement on a plan to guarantee the nation’s security in an increasingly dangerous and volatile world.

The Indispensable Nation

A generational struggle is underway to win a battle of ideas around the world. As the battle rages on, one country must lead the way to victory — America.

A Lesson in Hope from Dharavi

In the past 20 years, free enterprise has transformed India. Between 1965 and 1975, per capita income in the country rose by just 0.3 percent annually. But from 2005 to 2013, that figure has more than doubled, from $740 to $1,570.

Tackling a Troublesome Tax Code

More than 40 states currently impose a personal income tax on income earned within their borders, regardless of the earner’s state of residency. With more Americans traveling out of state for their jobs, two Members of Congress have introduced legislation to ease this burden.

The New Epidemic

With the price tag for heroin, alcohol and other drug abuse totaled more than $6 billion annually in Kentucky, a look at how one community in the state is trying to fight the problem and prevent this scourge from ruining — and ending — more lives.

Ripon in the Reagan Years

With THE RIPON FORUM celebrating its 50th year of publication, one of the journal’s longtime editors looks back at the accomplishments of The Ripon Society in the 1980s and how the organization fought to keep the vision of “broad Republicanism” alive.

Ripon Profile of Larry Hogan

The Governor of Maryland discusses his first year in office, which has been marked not only by his successful effort to roll back the “rain tax,” but by his courageous battle to defeat cancer.

Tackling a Troublesome Tax Code

Thune & Bishop online photo

As sovereign governments, states are generally free to set their own tax policies.  However, it is important that they do so in a way that does not place a substantial burden on interstate commerce.  As the American workforce becomes increasingly mobile, Congress has a constitutional duty to ensure that state income tax policies do not interfere with interstate economic activity.

Currently, more than 40 states impose a personal income tax on income earned within their borders, regardless of the earner’s state of residency.  In each of those states, not only is a non-resident employee required to pay tax after carrying out work for a certain period of time or earning wages in the state, but his or her employer must also withhold that state’s income tax on behalf of the employee and remit it to the state at the end of the tax year.  The question then is whether compliance with various state income tax and withholding laws places a substantial burden on employees who cross state lines to do their jobs?  A witness recently testified at a House Judiciary Committee hearing about an egregious example of an employee at his company having to file 50 W-2s in one year.  After hearing his story and others like it, we believe the answer is clearly yes.

Currently, more than 40 states impose a personal income tax on income earned within their borders, regardless of the earner’s state of residency.

Take, for example, an employee who lives and works in Michigan but travels to and from New York for 15[1] days in a year.  The employer should withhold payroll taxes from both Michigan and New York proportional to the number of days worked in each state. The employee would then file two separate W-2s – one in Michigan for his or her resident income tax return, and another in New York for his or her non-resident income tax return.  The State of Michigan would then give the employee a tax credit for any income tax paid to New York.  Although the total dollar amount in taxes paid may be the same for the employee, there are potential penalties for failing to file or not withholding in a timely manner, not to mention the administrative expenses imposed on both the employee and the employer.  This scenario is even worse for an employee who lives in a state without an income tax, such as South Dakota.  Such an employee would be required to pay income tax in New York without any opportunity to have this new tax liability offset by virtue of an income tax credit in his or her home state.

In order to vastly simplify the income tax obligations for families and businesses, we have introduced legislation that will reduce the costs for America’s mobile workforce without hindering interstate commerce.  The House and Senate bills – H.R. 2315 and S. 386 – comprise the bipartisan Mobile Workforce State Income Tax Simplification Act of 2015.  If enacted, this legislation would provide a bright-line test for when state and local governments can subject non-residents to state and local income taxes.  Specifically, the bill provides that wages paid to an employee working in multiple states would be subject both to the laws of the employee’s state of residence and the states in which the employee conducts business for more than 30 calendar days of the year.

Members of Congress and America’s workforce have seen firsthand the myriad conflicting income tax laws facing traveling workers, or our “mobile workforce.”  These laws burden small businesses that often do not have the resources to adhere to dozens of state income tax regimes.  Simply put, American workers should not be punished with burdensome paperwork simply because jobs in the modern economy may take them to multiple states.

A witness recently testified at a House Judiciary Committee hearing about an egregious example of an employee at his company having to file 50 W-2s in one year.

Rather than expanding their payrolls or reducing the prices of goods for consumers, businesses are being forced to re-allocate resources to comply with convoluted state income tax laws.  The Constitution grants Congress the authority to enact laws that protect the free-flow of commerce between the states.  While we support federalism and the ability of states to set their own policies, the problems created by allowing states to determine when they can impose income tax on residents of other states deserve a serious solution.

We live in a time when more and more Americans are finding themselves traveling for their jobs, and the tax complexities created in this new economy demand a common-sense solution.  With significant bipartisan support in both the House and Senate, we remain optimistic about our legislation becoming law in the near future.  Reducing an obvious administrative burden will allow employers and employees alike to focus their resources on what really matters, such as increasing payrolls and raising wages.  This Congress is focused on building an economy that will empower all Americans to seek new opportunities and achieve a better life. Enacting the Mobile Workforce State Income Tax Simplification Act of 2015 is another way we can achieve that goal.

U.S. Senator John Thune (SD) is Chairman of the Senate Republican Conference, and Rep. Mike Bishop represents Michigan’s 8th Congressional District. 

[1] Note that NY imposes withholding obligation on the employer if the employee works in NY for more than 14 days in the year.