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How a Tax Law Helps Insure a Scarcity of Programmers (1998)

nytimes.com

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Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#41

Post by bjelkeman-again »

scotty79 wrote: post #38
3pt14159 wrote: post #6

Earlier quoted context omitted.

They do not. Anyone is free to create a sole proprietorship/partnership/corporation provided that there is not national security implications ("Pam and Tom's Atomic Weapons" - Disallowed "Pam and Tom's Fighter Craft Displays" - Allowed) or confusion in the marketplace or depletion of nation resource (fishing companies, dairy companies, logging, etc). Actually, small business law in Canada is extremely well thought ou…

Can you as us citizen register company in Canada and provide your services in US? Is there anything against it? Import tax on services?

There are similar rules to the US rules in the UK, but what we do instead is that we hire people cross border in the EU as there is no real coordination on these things between the countries. If there was they would open up a can of worms around where the tax money goes and who gets what for the services.

In fact the only sensible way to work for a Dutch company whilst living in Sweden is to have your own company or be a sole trader, even if you work 100% for the same company in the Netherlands and invoice only them.

Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#42

Post by scotty79 »

In my country there is a problem with employers forcing their employees to fictionally incorporate, so employer can save on social security (in case of 1 person companies social security is not associated with actual income, but can be paid in low minimal monthly amount, of course lower monthly social security payments means lower retirement benefits which is not good for fictionally incorporated employees).

Our IRS equivalent decides that incorporation was fictional if former employee has 1 person company, has only one client and this client is his former employer. If you have multiple clients and none of them hired you before you started your own company then you are safe.

Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#43

Post by defen »

grellas wrote: post #30

I have dealt with this law in depth, from every angle, from its inception in 1986 and have a few observations to make about it: 1. The technical issue concerns the tax risk to an employer whether someone functioning as an independent contractor might be reclassified as an employee via an IRS audit that finds that the person is in fact functioning as an employee and not as someone who runs his own business. This risk…

> For the near future, I am afraid tech service providers are stuck and have no real remedy for this problem.

Well...there is one remedy.

Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#45

Post by gamble »

3pt14159 wrote: post #6
artanis0 wrote: post #4

Anyone know if any laws like this exist for Canada?

They do not. Anyone is free to create a sole proprietorship/partnership/corporation provided that there is not national security implications ("Pam and Tom's Atomic Weapons" - Disallowed "Pam and Tom's Fighter Craft Displays" - Allowed) or confusion in the marketplace or depletion of nation resource (fishing companies, dairy companies, logging, etc). Actually, small business law in Canada is extremely well thought ou…

It doesn't seem like there's as much incentive to misclassify employees as independent contractors in Canada. With government-provided health care and low/no payroll taxes, it isn't as lucrative to substitute contractors for full-time employees.

I've worked with plenty of contractors and few of them were 'independent' by any reasonable definition, but no one seems to care much. Every contractor I've worked with seemed to be in it to shift the risk/reward ratio in their favour, rather than because they couldn't find a full-time job.

Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#46

Post by retro »

grellas wrote: post #30

I have dealt with this law in depth, from every angle, from its inception in 1986 and have a few observations to make about it: 1. The technical issue concerns the tax risk to an employer whether someone functioning as an independent contractor might be reclassified as an employee via an IRS audit that finds that the person is in fact functioning as an employee and not as someone who runs his own business. This risk…

This seems to directly affect programming contractor rates.

Let's say you can contract yourself out directly to a company at $200/hour in 1985.

After 1986 if, for all practical purposes, you have to go through an agency for the same work, that agency now wants their cut.

This cut could be 50% or more of the actual rate to account for expenses and profit.

So you end up going from an effective contract rate of $200/hour to a rate closer to $100/hour.

Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#47

Post by liamkf »

andrewljohnson wrote: post #31

Insure -> Ensure As an ex-college-newspaper editor, this error always stands out to me. And the NYT should know better.... even in 1998. YC's headine is the same as the Times.

Hmm, it seems like they're pretty much interchangeable at this point: http://dictionary.reference.com/browse/Insure

Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#49

Post by tpyo »

CulturalNgineer wrote: post #29
jbooth wrote: post #8

For those who didn't read all the way down, this law was passed in order to pass a tax cut on overseas operations that IBM was lobbying for. PAYGO rules and all that. Your congress at work -- raise taxes on the little guy in order to give tax breaks to the wealthiest.

Absolutely right! This is the problem... Which is also why we've developed such an imbalance in wealth! We've got a serious problem with an imbalance in INFLUENCE!!! Actually that's my own focus for technological innovation... Realtime Networked Citizen Lobbying and distributed credit creation... (no pitches here, see my blog if interested) Fortunately I don't fly planes and still have a sense of humor.

[1-6] Is this an ironic joke?

[6] Are you jealous?

Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)

#50

Post by andrewljohnson »

liamkf wrote: post #47
andrewljohnson wrote: post #31

Insure -> Ensure As an ex-college-newspaper editor, this error always stands out to me. And the NYT should know better.... even in 1998. YC's headine is the same as the Times.

Hmm, it seems like they're pretty much interchangeable at this point: http://dictionary.reference.com/browse/Insure

It's true you can be lenient about this, but the Associated Press style is to distinguish: http://www.wsu.edu/~brians/errors/assure.html. I would have thought the Times would follow suit.

They really are two different words.

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