Yesterday the Supreme Court ruled that MD tax law was unconstitutional in it's method for taxing income from out of state. I was wondering about how long it takes from this type of ruling until people in MD can start filing amended tax returns to start getting some of the money back? Do we need to wait for new rules to be written or is something like this effective immediately?
A divided Supreme Court ruled Monday that Maryland’s income tax law is unconstitutional because it does not provide a full tax credit to residents for income tax paid outside the state, a ruling likely to cost Maryland counties and localities across the country millions of dollars in revenue.
The court voted 5 to 4 to affirm a 2013 Maryland Court of Appeals ruling that the state’s practice of withholding a credit on the county segment of the state income tax wrongly exposes some residents with out-of-state income to double taxation. Justices said the provision violated the Constitution’s commerce clause because it might discourage individuals from doing business across state lines.
This should be interesting in the states that have city income taxes and folks are taxed in the city they live in and in the city they work in, if it is not the city they live in. Some cities give a credit for taxes paid to a non-resident city, but some do not. There is a difference in a few states in that they call the tax in the city you work in an employment tax and the tax in your resident city an income tax. A rose by any other name!!! You would think that if you pay taxes to a city you should be able to vote for a representative, e.g. the mayor or a councilman, and/or vote on issues regarding the spending of the tax money you pay. None of the cities I know of allow nonresidents to vote even though they pay taxes. Isn't that taxation without representation? The MD decision is a good decision.