[marktwain]

These employers could get around this problem very easily by establishing a minimal corporate presence in New Hampshire and paying these employees through that separate entity.

Or, just move their corporate presence outside of Massachusetts.

They could move it to a tax freindly state such as Nevada, Texas, or Florida, or even off shore.

No reason to subject your employees who work online to more taxes than necessary.

[Alberta's Child]

Even if the company is legally domiciled in Florida or Nevada, it will still owe taxes in the state where the income is earned. In many industries you couldn't do business in one state without having a registered presence there.

One of my biggest clients is legally incorporated in Delaware but has its headquarters office in New Jersey. They pay New Jersey taxes for all of their operations in the state.

The purpose of establishing a headquarters in a low-tax state is to avoid paying corporate taxes on earnings from OTHER states. In the DE-NJ example I cited, the company may earn 60% of its revenue in New Jersey, but since it is legally domiciled in Delaware it doesn't have to pay New Jersey taxes on the other 40%.