States are free to create their own laws to tax residents, part-year residents and nonresidents. There is no national state tax system. State taxation, like other laws, vary by state. For example, states treat marijuana differently. If you were caught with marijuana in a state where the drug is illegal you can’t go to court arguing that you should not be penalized because marijuana is legal in your state.
Many states, including Maryland and Colorado, calculate a base tax on total income. Nonresidents and part-year residents then pay tax on the percentage of state income multiplied by the base tax. You are correct—sometimes you pay a higher tax under this method than if your tax rate was figured on your state-only income.
The argument for this method is that you are actually paying your fair share. If you made $10,000 a month ($120,000 total) but only $20,000 in the nonresident state, some will argue that someone who makes $120,000 shouldn’t pay the same tax as a full-year resident who earned $20,000 total for the whole year.
