State and Local Tax Policy in a Time of Telework

David R. Agrawal and Xinyu Chen

No 12422, CESifo Working Paper Series from CESifo

Abstract: The taxing authority of subnational governments is limited by the geographic location of individuals and economic activity. The rise of telework decouples a worker's residence from the employer's location, creating challenges for personal income taxes, corporate income taxes, and unemployment insurance. Using Census data, we show that teleworkers are more likely than non-teleworkers to move interstate and realize larger reductions in their state tax burdens from a move. Motivated by this evidence, we evaluate alternative principles for sourcing labor income to the state of residence, the employer, or work and discuss how remote work reshapes subnational tax bases.

Keywords: telework; work-from-home; income tax; sales tax; property tax; sourcing rules; migration (search for similar items in EconPapers)
JEL-codes: H24 H25 H71 J21 J68 R51 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12422

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