The acting U.S. Solicitor General sharply criticized New Hampshire’s lawsuit against Massachusetts over income taxes in a brief Wednesday, writing that any lawsuit should be brought by individual workers who have actually paid Massachusetts income taxes while working from home in New Hampshire.
New Hampshire filed a lawsuit in the U.S. Supreme Court in October, seeking to stop Massachusetts’ collection of income taxes from people who are working remotely in New Hampshire for Massachusetts companies.
Before the pandemic, New Hampshire residents paid income taxes based on the number of days they actually worked in Massachusetts.
During the pandemic, Massachusetts has continued levying income tax on New Hampshire residents who had been working in Massachusetts before COVID-19 but started working from home for the same company. The policy is set to expire by mid-September, three months after Massachusetts ends its COVID state of emergency on June 15.
New Hampshire filed a lawsuit in the U.S. Supreme Court last year to stop the practice. The New Hampshire complaint argued that the temporary tax policy could dissuade people and companies from moving to New Hampshire. Massachusetts argued that it has always taxed Granite Staters who work for Massachusetts businesses.
In January, the justices of the Supreme Court asked the U.S. Solicitor General’s Office to provide a brief outlining the federal government’s position.
The brief submitted Wednesday by Acting Solicitor General Elizabeth Prelogar blistered New Hampshire’s arguments, saying a lawsuit between states made little sense in this case.
A plaintiff in a lawsuit is supposed to be able to show they have been harmed by the defendant’s actions. Prelogar wrote that New Hampshire’s complaint only speculated that the state might be harmed indirectly by the Massachusetts policy.
She wrote that the state might not be affected by the tax policy. Massachusetts is not taxing the state of New Hampshire itself, Prelogar wrote, so New Hampshire “is not the most natural plaintiff.”
She said a suit brought against Massachusetts by individual taxpayers would be more appropriate. Prelogar noted that Massachusetts already has a mechanism for individual taxpayers to dispute their tax assessments.
New Hampshire’s complaint argues that process would “avoid the constitutional issue,” but Prelogar argues it would be a benefit to settle the taxpayers’ cases in normal forums, rather than in the Supreme Court, because individual taxpayers’ cases may vary.
New Hampshire politicians were swift to criticize the brief and said they hoped the Supreme Court would still hear the case.
“Try as they might, overreach by Washington politicians and efforts by the Biden administration will not deter NH from fighting against Massachusetts’ unconstitutional attempt to tax our citizens,” Gov. Chris Sununu wrote on Twitter Wednesday. “We remain confident that the Supreme Court will hear our case and that we will win.”
“I’ve long said that attempts by other states to unfairly tax New Hampshire residents are unconstitutional,” U.S. Sen. Maggie Hassan said in a statement Wednesday, calling the Massachusetts policy a “bad-faith effort.”
“We need strict and clear limitations set upon states that attempt to wrongly tax Granite Staters and I will continue to push to ensure exactly that.”
Sen. Jeanne Shaheen said she thought the policy was unconstitutional.
Rep. Chris Pappas introduced a bill last year that would require teleworking employees to pay taxes in the state where they were physically present, no matter where their employer is located.
“This development further underscores the need for a permanent, legislative fix to protect teleworking Granite Staters — and workers across the country — from being forced to pay an unfair income tax,” Pappas said of the brief.