Commuter Taxes: An Untapped Revenue Source?

For all those cities that double population during the work day, here's a revenue thought to consider. But why restrict it to in-bound commuters? What about residents who commute-out of the city? Is the commuter tax a legitimate revenue source?

2 minute read

March 26, 2014, 5:00 AM PDT

By Irvin Dawid


While "New York City’s commuter tax expired more than a decade ago, political arguments for its revival continue to persist, as recently as last year’s mayoral election," writes Mike Maciag, data editor for Governing. But this revenue option is not limited to big cities.

"Last week, officials in Johnstown, Pa., which participates in a state program for distressed cities, told a panel of judges that they either needed to implement a commuter tax or scale back services. In Indiana, state legislators are mulling their own commuter tax for counties."

However, cities with the highest percentages of nonresident commuters in their workforce may not be what you think they are. See quiz questions below.

And the commuter tax need not be restricted to the conventional commuter. There could also be a "reverse commuter tax". Distressed areas could consider a related revenue stream for their residents who commute the opposite direction.

Buried deep in Detroit Emergency Manger Kevyn Orr’s restructuring plan released last month was a single line that caught the attention of one group of taxpayers. For the first time, the city publicly stated it was weighing an ordinance requiring employers to withhold city income taxes for reverse commuters.

So job-rich areas might tax non-residents who commute in, and job-poor cities could tax residents who commute out. However, it's the conventional commute tax that is considered the most "as property tax bases dwindle," writes Maciag. "Taken together, these two groups of taxpayers represent a largely untapped source of potential revenue that cities may begin to target more aggressively, particularly if they’re struggling."

Readers might wish to view "Governing's compiled data published for the Census Bureau’s American Community Survey to compute localities’ estimated nonresident workers. Across all cities with at least 50,000 workers, nonresidents accounted for slightly more than half – 52 percent – of the total workforce."

However, note that areas need not be incorportated, as is the case for the one in Fairfax County, Virginia, population 19,627, with the highest percentage of nonresident workers: 91.6%.  Guesses anyone?

And here's a surprise - for me, anyway. Guess which cities in New York State had the highest and the lowest percentages of nonresidents in their workforce?

  1. White Plains
  2. Albany
  3. Rochester
  4. Syracuse
  5. Buffalo
  6. Yonkers
  7. New York

(Answer: It's numbered in descending order. New York City had 21.5%; White Plains, 81.2%)

Wednesday, March 5, 2014 in Governing

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Aerial view of town of Wailuku in Maui, Hawaii with mountains in background against cloudy sunset sky.

Maui's Vacation Rental Debate Turns Ugly

Verbal attacks, misinformation campaigns and fistfights plague a high-stakes debate to convert thousands of vacation rentals into long-term housing.

July 1, 2025 - Honolulu Civil Beat

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

July 2, 2025 - Diana Ionescu

White and purple sign for Slow Street in San Francisco, California with people crossing crosswalk.

San Francisco Suspends Traffic Calming Amidst Record Deaths

Citing “a challenging fiscal landscape,” the city will cease the program on the heels of 42 traffic deaths, including 24 pedestrians.

July 1, 2025 - KQED

Google street view image of strip mall in suburban Duncanville, Texas.

Adaptive Reuse Will Create Housing in a Suburban Texas Strip Mall

A developer is reimagining a strip mall property as a mixed-use complex with housing and retail.

5 hours ago - Parking Reform Network

Blue tarps covering tents set up by unhoused people along chain link fence on concrete sidewalk.

Study: Anti-Homelessness Laws Don’t Work

Research shows that punitive measures that criminalized unhoused people don’t help reduce homelessness.

7 hours ago - Next City

Aerial tram moving along cable in hilly area in Medellin, Colombia.

In U.S., Urban Gondolas Face Uphill Battle

Cities in Latin America and Europe have embraced aerial transitways — AKA gondolas — as sustainable, convenient urban transport, especially in tricky geographies. American cities have yet to catch up.

July 6 - InTransition Magazine