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Telecommuters May Owe Extra State Taxes
marct22 writes "According to Cnet News, the US Supreme Court refused to hear an appeal by a Tennessee programmer who was forced to pay extra taxes because he was telecommuting to a job in New York. Apparently he worked in NY 25% of the time, which he didn't argue about, but the other 75% of the time he worked from home in Tennessee, which doesn't have income taxes. Also, it appears that right now, for those of us who live in one state and telecommute in another may be doubly taxed if both have income tax. There is a Telecommuter Tax Fairness Act in the Senate, but it has not emerged from committee so has not been voted on."
A guy plies his trade in a place where certain taxes apply and he has a problem with this? Since when did not having a physical presence in a place exempt you from from their laws? Really, as far as New York is concerned this guy is working in their manor and drawing an income from their economy and is therefore liable for their taxes. The fact that he does not actually shift his carcass over the the state line is irrelevant. Everyone expects free beer these days.
Modest doubt is called the beacon of the wise. - William Shakespeare
Seriously, I would owe taxes in a lot of states if this were taxable. Shouldn't you just tax a person in his place of employment if he is a remote worker?
Taxes pay for the services that you use. Is this guy using the roads to get to work? Are his kids going to the schools? No! Why should he pay for that stuff? The taxes he pays in his home state cover this stuff in his home state. The people who live in the other state should be paying for those services provided there.
This is why the US of A needs the FairTax.
It would do away with all this income tax malarkey. At least at the federal level. Once that happens, it's a good bet that individual states would follow suit.
"Michael, I did nothing. I did absolutely nothing - and it was everything that I thought it could be."
... where its a-okay to outsource to China and India, but to a low-tax state? Hell no.
Parent is 'insightful', not funny.
Yes, they would, using the same logic as where the work is actually done whether it's from one state to another or one country to another. And to get you to pay it would probably be deducted up front and you'd have to file for a refund. Does India's equivalent of the IRS give a discount for income taxes paid to other countries like the US's IRS?
That's why his employer pays taxes...
IANAA (I am not an American), but didn't you guys have some kind of beef with 'Taxation without Repesentation?' Surely this is exactly what NY State is demanding?
(is it a troll if it's true?)
Huh? Tax money == state revenue. The state generates revenue by collecting a tax on incomes (among other things).
That being said, a better way of doing it would be via a sales tax. That way you get charged for the commerce you actually participate in, not your potential to particpate.That'd be a big sales tax. And why should people be charged for participating in commerce? Commerce redistributes wealth and keeps the economy healthy. Taxes are supposed to pay for government services. There may be better ways than income tax but sales tax sure as hell isn't it.
Grandparent sig: 100% Anti-libertarian
Parent question: Just what is it that you oppose about libertarians?
Parent sig: There is no worse tyranny than to force a man to pay for what he does not want merely because you think it does him good
Maybe it's because your definition of "worst tyranny" is pretty weak. Most libertarians I've met focus on petty technicalities which are only important if you ignore the big picture of murder, mayhem, and general starvation and deprivation. Their worries generally fall into the category of counting angels on pin heads.
Infuriate left and right
There is no worse tyranny than to force a man to pay for what he does not want merely because you think it does him good
.... I could go on, and on, and on, and on.
Sounds good, but just rediculous when you think about it. Examples of "worse tyranny":
1) Force a man to pay for something he does not want because you think it will hurt him.
2) Force a man to pay for something desired by the ruling class, to hell with whether or not it hurts him.
3) Force a man to sit and rot in prison, unable to even distract himself from his misery with work routines because he disagrees with the ruling class.
4) Force a man to occupy a particular position in society, with no hope or opportunity of improvement or self-betterment.
5)
PS: I'm a populist libertarian.
I have no problem with your religion until you decide it's reason to deprive others of the truth.
Besides, does this guy get to vote in New York State elections now? If not, it's taxation without representation.
I was thinking the exact same thing. Some of my friends are in a simliar situation because they live on the Wisconsin/Illinois border. I live and work in Wisconsin so I pay Wisconsin Income taxes. Some of my friends work in Wisconsin but live in Illinois. Do they pay the Wisconsin and Illinois income tax? No. They pay the Illinois income tax because that is where they live. They do not get to participate in Wisconsin elections (state and local) because they are not a resident.
This only makes sense.
I can't think right now of any recent discussions with libertarians, but I can give you the flavor of what I meant. There was an interesting group a few years back, maybe still in existance, the Artemus Society I think. Their motto was "We're going back to the moon, and this time we mean to stay" or something similar. They discussed all sorts of things, and I thought them pretty interesting. Some were actually practical, such as what the regolith would provide, best way to build simple fast shelters from local materials and energy, etc. But they also argued incessantly over some of the most nitpicky nonsense. It was the equivalent of covered wagon pioneers fighting over how to lay out city streets, whether sidewalks should be 3 feet wide or 4 feet wide, should there be a grassy strip between the street and sidewalk or should the sidewalk be an extension of the curb, etc etc ad nauseum.
Tons and tons of stuff that wouldn't apply for a hundred years, would be inapplicable then anyway, and was a complete distraction from actually getting to the moon.
That's been my experience with libertarians. I'd love it if government were 1% its current size, if laws couldn't be enforced at all if they were only enforced spottily and rarely, if they applied to everybody at all times. But the reality is different. Arguing about throwing out the tax code in favor of simply paying for services, for instance, is mental masturbation. It is never going to happen. We have a bureaucratic government, it works more or less, that is what we have, and arguing about the details of its idealistic replacement is a sheer waste of time.
Infuriate left and right
Here is where I see the problem occuring (even assuming that I agree that I am paying taxes for a service -- I do not agree that it is quite that simple):
In meatspace, you are expected to pay the taxes in the state where you earned the money. This can be a pain in the ass sometimes -- I once had to file in three different states because I had worked in three states that year (i.e. actually physically worked in those states, and was paid by employers in those states). In theory, I was taking advantage of the services offered by those states during my tenure there. So, it seems that this is some attempt to bring meatspace rules to the world of telecommuting.
The problem is this: where should you pay your income taxes? in the state where you are working, or in the state where your employers are paying you? I was a bit unclear from the article, but it sounds like it boils down to this question. Obviously, as the technology is relatively new (in the broad scheme of things), there are going to be some problems ironing things out. It sounds like some folk are having to pay two states for the same income, which just seems wrong to me. On the other hand, they really ought to be paying income taxes in one state or the other.
If anyone cares for my opinion, they should be paying taxes in the state where living. In theory, they are using the government services in that state, so should pay taxes in that state to provide for those services. However, as there does not seem to be a great deal of federal regulation of state tax systems, it seems that both states are trying to get a chunk of the change.
Rhapsody in Numbers
The problem that I have with comments like this is that the extremely wealthy pay the majority of US income tax. Therefore, any change will affect them disproportionaly. Look at IRS data. Taypayers in the top 1%, as ranked by income, pay 34% of all federal income tax.
Well of course they do. They own 80% of all property!
"We returned the General to El Salvador, or maybe Guatemala, it's difficult to tell from 10,000 feet"
The problem I see though is that you could live in one high-income-tax state and work in another. This could effectively double one's taxes in extreme cases. Now, of course if you are a consultant and your own business, then the tax situation gets easier. So this is good for freelancers and bad for employees.
And with the attmept at the moment to take away the state tax deduction from one's income tax, this could get even messier.
It also seems to me that this could continue to accellerate offshoring trends...
LedgerSMB: Open source Accounting/ERP
It's hard to get people to take this seriously, but the idea of abolishing the IRS, income tax, capital gains and estate taxes, and implementing a National sales tax makes a lot of sense.
No it doesn't. The sales tax is *incredibly* regressive. And the % necessary to even begin to make up the difference would be insanely high.
The basic end result is that the poor and middle class get screwed out and the rich get a massive tax break. I won't even tough the myriad of other problems. Whether it's rampant opportunities for fraud(With no IRS, how will you make sure people pay the sales tax?) to the massive invasion of privacy necessary to enforce it (now, instead of tracking your income, the gov't tracks *all* your purchases), it's just a bad bad bad bad idea.
Funny that. I remember this little scuff with a small island nation over taxation without representation.
Kind of reminds me of that...
Everything I need to know I learned by killing smart people and eating their brains.
So, the real question is: Why is it fair that I pay a much larger portion of my wages than someone making less than me?
I'm not going to say it is or isn't fair, but there is a case to be made for the fact that when you're making such a dramatic amount more than your fellows, it's not because you were doing such a dramatic amount more work, it's because you managed to get a setup going where you're being paid for other peoples work, and you're getting a higher return on the infrastructure than others because you've got all your underlings using it to make you money. As in, I'm only using and relying on the infrastructure for my own use, but Bill Gates is using and relying on the infrastructure for the many thousands of people who work daily to earn him his money. It's not as cut and dried as that in most peoples cases, but the fundamental principle is the same. You pay more because, at the end of the day, it doesn't matter fair or not, if control over the wealth is concentrated in a few hands, those few hands are going to have to feed the machine that gives them that wealth whatever it needs or they won't continue to have it.
-1 Uncomfortable Truth
The reasonable thing would be to tax them in their place of presence.
IANA, but the reasonable thing to do seems to me allowing the taxpayer to choose domicile for the purposes of taxation. This creates competition between states for the favour of the taxpayer.
All civilized countries, including the US, have tax treaties establishing some domicile principle to prevent the obvious injustice of double taxation, but states inside the US apparently still have to solve this problem? I do understand it is problematic to negotiate a tax treaty with a state that does not have an income tax at all, but it's surprising that this can happen in 2005.