SCOTUS Sides With Massachusetts Over N.H. In Income Tax Collection Spat
Justices on the U.S. Supreme Court denied a lawsuitfiled by New Hampshire that accused Massachusetts of violating the Granite State's sovereignty by temporarily altering its income tax collection rules.
The order, released Monday, effectively ends an inter-state spat that centers on an emergency provision passed during the pandemic that caps how much income out-of-state residents who work for Massachusetts-based entities can deduct from their income taxes while working remotely.
New Hampshire’s lawsuit, filed by former Attorney General Gordon MacDonald, asked the Supreme Court to rule that Massachusetts was violating the sovereign rights of an estimated 100,000 New Hampshire residents by imposing a tax on workers who, due to the pandemic, weren’t setting foot in Massachusetts.
Massachusetts told the courtits tax policies were a temporary reaction to the pandemic, and that anyone who believed they were harmed by the policy could appeal to state tax authorities. Maura Healey, the commonwealth’s attorney general, also argued that its provisions did not disrupt New Hampshire’s ability to set its own tax policies, as it sees fit.
The brief order released by the court Monday denied New Hampshire’s motion to hear the case, but noted that Justices Clarence Thomas and Samuel Alito dissented. The Supreme Court has exclusive authority to hear cases between states, a concept known as original jurisdiction, meaning New Hampshire is likely unable to seek relief in another court.
The ruling is unifying in condemnation a sweeping list of politicians in New Hampshire—including the state’s entire Congressional delegation, Gov. Chris Sununu, and Republican and Democratic members of the New Hampshire House and Senate—who have all issued statements Monday criticizing the ruling.
“This decision will have lasting ramifications for thousands of Granite State residents,” said Sununu.
The response from the prevailing side has been more muted.
“The Administration appreciates the Supreme Court’s decision,” said Patrick Marvin, a spokesperson for the Massachusetts Executive Office for Administration and Finance.
In May, at the Supreme Court’s request, the U.S. Justice Department issued its opinion on the dispute, arguing that New Hampshire’s claims didn’t warrant the involvement of the nation’s highest court. Massachusetts also noted in a brief that with its state of emergency ending in mid-June, the temporary tax provisions will expire in mid-September.
(Editor's note: this post was updated at 4:30pm)