Telework in Colombia, Part 2

Colombia’s First International Telework Fair went off as scheduled on 26 July 2012. Before it started I was interviewed by Rafael Orduz Medina, the Executive Director of Colombia Digital. Here’s the video:

Colombia Digital is the sponsor of the fair together with the Ministry of Information Technologies and Communications of Colombia. The opening ceremonies included presentations by Diego Molano Vega, the Minister of Information Technologies and Communication; Rafael Pardo Rueda, the Minister of Labor of Colombia; Carlos Tomada, the Minister of Labor of Argentina; Samuel Moreno Rojas, the Mayor of Bogotá; and Colombian Senator Claudia Wilches. Topping off these statements was the signing of a pact among these government agencies and a number of Colombian business organizations (including Cisco and Microsoft delegates) to accelerate the adoption of telework in the country.

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Taxation with duplication revisited

Nicole Belson Goluboff has been kind enough to send me a more detailed description of the double taxation issues I covered a while back. Here it is. [Update, 23 October 2012:] You may also wish to see a more extended discussion of the issues here.

From East Coast to West, Calls for Telecommuter Tax Fairness

by Nicole Belson Goluboff

As Jack observed in Taxation with duplication, the double tax threat facing interstate telecommuters is a longstanding obstacle to telework’s growth. The Telecommuter Tax Fairness Act – federal legislation that has enjoyed significant support both within and outside government – would remove this obstacle. Although the measure has been introduced in multiple sessions of Congress, lawmakers have not made it a priority. They must do so and make telecommuter tax fairness the law.

The extortionate penalty for telecommuting across state lines derives from a state tax rule, which a number of states maintain, known as the “convenience of the employer” rule. New York, in particular, has become notorious for its aggressive application of the rule. Under New York’s rule, if a nonresident works for a New York employer and chooses to telecommute sometimes, New York will tax her on 100% of her wages – not just the wages she earns on the days she works in New York but also the wages she earns while working at home, in a different state. Because employees’ home states can also tax the wages they earn at home, many telecommuters are forced to pay taxes to two states on the same income.

To help their telecommuting residents avoid double taxation, some states offer a credit for the taxes the telecommuters pay New York on the wages they earn at home. However, these workers may still be penalized for their interstate arrangement. If the tax rate in New York is higher than the tax rate in the home state, the telecommuters will have to pay the higher New York rate on their home state earnings.

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