Nearly 150,000 people commute into Arlington County, Virginia, on a typical weekday from all points around the Washington, D.C., region for work at the Pentagon, government contracting offices and other employers.

The debate over whether such commuters should directly contribute to the tax base of the jurisdictions in which they work is as old as commuting itself. In Arlington County, as in most of the rest of the country, the vast majority of commuters don’t pay the county a dime in income or property taxes. At the same time, their presence generates a great deal of economic activity contributing to the county's budget.

Want more urban news? Click here.

Many of the nation’s urban centers similarly see their populations swell during the day with an influx of workers, creating a greater need for such things as additional public safety and maintenance of transportation infrastructure. In fact, out-of-town commuters account for the majority of the workforce in 32 counties with populations exceeding 65,000, according to the most recent census estimates.

Nowhere is this more prevalent than Arlington, where an estimated 77 percent of those working in the county live elsewhere. About 50,000 workers travel across the border from the much-larger neighboring Fairfax County. Tens of thousands more cross the river into Arlington each day from the District of Columbia or Maryland suburbs.

It’s no surprise, then, that getting all these people to work – both via the area’s heavily-trafficked roads and aging transit system – presents a challenge.

Still, Michelle Cowan, the county's director of management and finance, says the commuters are a net benefit to the county.

For one thing, they contribute sales and meals taxes. Property taxes account for 56 percent of the county’s total revenues, and the commercial properties supported by commuters make up about half the real estate tax base, providing the county with stability, Cowan said. “It makes a difference when you have major businesses that want to be in the county because we have quality services and our infrastructure is in good shape."

Some local governments have sought out additional revenue beyond property taxes. Houston, for instance, assesses a drainage fee based on the square footage of driveways and other impermeable surfaces, and spends that money on the city’s water and waste water infrastructure.

Arlington levies a special tax on commercial and industrial property to fund its transportation projects, such as road resurfacing and a planned streetcar project. But beyond that, the county’s options are limited since Virginia courts have ruled local governments there lack the authority to seek new types of revenue without state approval.

Absent these restrictions, Cowan said the county would look at studying other potential sources of revenue.

Although rare, some localities assess commuter taxes to recoup the costs of services they provide nonresidents. New York City eliminated its commuter tax in 1999, leaving cities like Philadelphia as one of the few remaining large municipalities levying a commuter tax on wages earned by nonresidents, currently set at about 3.5 percent.

Rep. Darrell Issa, chairman of the House Committee on Oversight and Government Reform, suggested last summer that Congress should explore the possibility of allowing the District of Columbia to tax commuters. D.C. officials have long called for such a tax, but the idea appears unlikely to gain traction anytime soon.

Workforces with the greatest share of commuters are, of course, found in the nation’s larger employment centers. An estimated 1.6 million people commute into New York County (Manhattan) each day, the most in terms of raw numbers, followed by Cook County, Ill., where about 500,000 people commute in from around the Chicago suburbs. Yet, as in Arlington County, these commuters don’t directly contribute any revenue to the city in the form of either property or income taxes.

Michael Pagano, dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago, has argued this is why cities need to be able to adjust their tax structures to better link users of public services to costs, such as taxing of income by the place of employment.

Most states don’t allow municipalities to assess a local income tax, and in the few that do, only residents typically pay income taxes to the locality.

One of the few exceptions, Ohio, permits localities to collect a portion of income taxes from nonresident workers.

A bill introduced in the Ohio Senate last year would have cut this revenue, requiring big cities to grant commuters a tax credit of 10 percent or any tax liability greater than 2 percent of their taxable income. The threat of lost revenue prompted Columbus Mayor Michael Coleman to tell Columbus Business First that the fiscal impact of the legislation would "be worse than a tsunami."

Commuter taxes are becoming increasingly rare, driven in part by the greater clout suburban communities now enjoy in state legislatures, said Edward Zelinsky, a professor at Cardozo Law School who studies tax policy.

Zelinsky said he views commuters as a neutral or “slightly contributing factor” to most municipalities’ budgets. They don’t require more costly public education and human services expenses, and many of the larger institutions where they work, such as hospitals and universities, provide their own police units.

“The notion that commuters somehow harm the community or are a net drain isn’t very plausible,” he said.


The following Census survey data estimates the number of nonresidents commuting to work in counties. Data includes figures for larger counties with populations exceeding 65,000:

Source: Governing calculations using 2011 Census American Community Suvery 1-year estimates