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New rules for contractors have unexpected consequences for strip clubs

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Re: New rules for contractors have unexpected consequences for strip clubs

#61

Post by djsumdog »

AmericanChopper wrote: post #21
kelnos wrote: post #10

Essentially what's happening is that now the club owners have to pay a bunch of taxes they managed to avoid paying before. The dancers themselves were likely not paying as much in taxes as they were supposed to, but now, with paycheck withholding, they're probably paying more in taxes than they used to. The clubs, in order to compensate for all the "new" taxes, are only paying minimum wage, and are taking larger cuts…

> Really what it boils down to is that these are not sustainable businesses at the prices they currently charge customers That’s not the most obvious take away imo. I’d say it’s obvious that the strippers were doing a fair bit of tax evasion, but having known a few strippers, a successful stripper would still be making good money even with meeting all their tax obligations. The issue the clubs now face is that they c…

If these places weren't filing 1099s before now, I highly doubt many of these workers were meeting tax obligations.

Re: New rules for contractors have unexpected consequences for strip clubs

#62

Post by djsumdog »

DevKoala wrote: post #48

I feel there is a strong argument to decouple social security and benefits from employment; the current legislation feels like a bad model design. I am confident that when it was first conceived, people sought to do well for individuals. Now, a month doesn't go by without a similar dispute affecting a new industry. The argument is always between individuals that want to become employees, and individuals that want to…

Health insurance is still hopelessly broken. A "gig economy" cannot work with such fundamentally broken services. I wrote about this a while back, having both worked in health insurance and having lived in other countries:

https://battlepenguin.com/politics/returning-to-america-and-...

I do not like the private model at all, but at a minimum, I agree with you and I think the ACA would have only worked if it forced employers to give employees vouchers to then have everyone buy insurance from a common marketplace. Obama's promise that people could keep their existing insurance was a terrible idea.

It does keep people in America perpetually working. No one can afford to really take time off for themselves even if they have the savings, because if they're not working enough hours to get health care and get sick, that's it. You're fucked. You have to use that other American Healthcare site: Gofundme.

Re: New rules for contractors have unexpected consequences for strip clubs

#63

Post by belltaco »

TheRealDunkirk wrote: post #38
kelnos wrote: post #10

Essentially what's happening is that now the club owners have to pay a bunch of taxes they managed to avoid paying before. The dancers themselves were likely not paying as much in taxes as they were supposed to, but now, with paycheck withholding, they're probably paying more in taxes than they used to. The clubs, in order to compensate for all the "new" taxes, are only paying minimum wage, and are taking larger cuts…

> If they want to keep their dancers from quitting, they'll likely have to raise prices enough to get a similar amount of cash into the hands of their dancers, while also meeting their tax obligations. Like people always say, when corporate taxes are discussed (and now I'm guilty of it too): companies don't pay taxes; consumers do.

Not always true. It depends on the price demand elasticity curve and margins.

Imagine Acme Inc selling Widgets at $100.

If taxes go up, the company's first instinct would be to increase the price. This works for some markets and products. However, if the customers and market are sensitive to price, they will lower or stop their consumption from Acme Inc. or move to competitors or substitute products e.g cooking at home instead of restaurants. In that case, Acme Inc has to pay the taxes out of their profits, assuming their profit was high enough, which results in lower profits, or takes losses and go out of business eventually.

Re: New rules for contractors have unexpected consequences for strip clubs

#64

Post by ken »

WaxProlix wrote: post #2

Law of unintended consequences, maybe? California did something pretty bold, and only time will tell if it was a good idea or not. Seems like there's a lot of fallout though, so far. Anecdotally, I know a few people whose small businesses were impacted by the change; neither knew it was even an issue until one was sued by a contractor they'd been working with for a few years. I wonder what kind of due diligence the S…

Enforcing their own regulations?

It's always been an open secret that companies love to mis-categorize workers in order to avoid paying taxes.

Re: New rules for contractors have unexpected consequences for strip clubs

#65

Post by SolarNet »

dghughes wrote: post #11

Where did all the money go? If the dancers made hundreds of dollars as independent contractors wouldn't it have been tips from customers? Wouldn't the dancers still get the same amount but now also $15/hour plus benefits?

Those benefits have to come from somewhere. As do the social security and unemployment contributions.

Re: New rules for contractors have unexpected consequences for strip clubs

#66

Post by AmericanChopper »

djsumdog wrote: post #61
AmericanChopper wrote: post #21

Earlier quoted context omitted.

> Really what it boils down to is that these are not sustainable businesses at the prices they currently charge customers That’s not the most obvious take away imo. I’d say it’s obvious that the strippers were doing a fair bit of tax evasion, but having known a few strippers, a successful stripper would still be making good money even with meeting all their tax obligations. The issue the clubs now face is that they c…

If these places weren't filing 1099s before now, I highly doubt many of these workers were meeting tax obligations.

The issue of tax evasion is really seperate to the fact that the changes in the law have killed the business model for the contractors. Being a payrolled employee in this case is worse for everybody involved, the employees most of all.

Re: New rules for contractors have unexpected consequences for strip clubs

#67

Post by ultrarunner »

shkkmo wrote: post #45
ultrarunner wrote: post #33

Earlier quoted context omitted.

> Sorry not sorry that you have to actually start paying taxes on your income like the rest of us I am. Paying taxes on income (that is then taxed again when spent) is a terrible disincentive. Some states agree with me; I would rather see the standard move toward a model free of income taxation than toward universal taxation. Doubly so when the tone of your comment seems to point to the motivation being largely spite…

> Paying taxes on income (that is then taxed again when spent) is a terrible disincentive. While I can understand opposing income based taxation, I don't understand why opponents of income based taxation would support specific industries evading existing income based taxation laws rather than working to change the taxation laws for everyone.

We are coming to the same point from different angles. For a lot of people it's easier to adhere to eye-for-an-eye than to stop and advocate for an end to violence, as it were. I was only taking issue with what seems to be cheering a step backwards ("I would be richer without income tax too").

Technically, given the way you put it, I suppose I would advocate for more and more specific industries not being subject to income taxation until no industries were paying it. Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming have realized this situation by one means or another. But I agree that, in general, consistent tax laws for everyone is a preferred outcome.

Re: New rules for contractors have unexpected consequences for strip clubs

#68

Post by Ruxbin »

To my understanding strip clubs got looped into this because their business and employees were classified much differently than your typical business. They aren’t open 24x7 and overwhelming majority of girls work part-time - that’s it.

The problem you have is with companies like Uber and other who have for nearly decades have abused contract work but strippers were classified as the same.

It’s too bad they got lumped and really shouldn’t have been but we’ve had enough major corporations screwing the middle class evading taxes.

Re: New rules for contractors have unexpected consequences for strip clubs

#69

Post by SomeOldThrow »

gizmo686 wrote: post #14
SomeOldThrow wrote: post #9

Earlier quoted context omitted.

I think the businesses are ruined—they probably legitimately don’t make enough money to pay a living wage and the necessary benefits with their current business model. I don’t see this as a problem in the long term for the strippers—unauditable cash will still rule. And frankly, let’s start with taxing other places, this really doesn’t strike me as a place of conspicuous tax avoidance compared to, say, the board room…

By "current bussiness model", do you mean current prices? I do not see anything in the bussiness model that precludes raising prices. The issue seems to be that current prices are based on the assumption of tax evasion. I have nothing against sex work, but it does not strike me as an industry worthy of tax breaks.

> I do not see anything in the bussiness model that precludes raising prices.

I was defining the business model by success with current regulations. I refuse to speculate about market effects beyond the possibility of any change aside from the regulatory change.

> I have nothing against sex work, but it does not strike me as an industry worthy of tax breaks.

Yea I never voted to fund defense contracts either. Yet, those fucks are getting paid. Not much to do about it but vote and revolt.

Re: New rules for contractors have unexpected consequences for strip clubs

#70

Post by TheRealDunkirk »

belltaco wrote: post #63
TheRealDunkirk wrote: post #38

Earlier quoted context omitted.

> If they want to keep their dancers from quitting, they'll likely have to raise prices enough to get a similar amount of cash into the hands of their dancers, while also meeting their tax obligations. Like people always say, when corporate taxes are discussed (and now I'm guilty of it too): companies don't pay taxes; consumers do.

Not always true. It depends on the price demand elasticity curve and margins. Imagine Acme Inc selling Widgets at $100. If taxes go up, the company's first instinct would be to increase the price. This works for some markets and products. However, if the customers and market are sensitive to price, they will lower or stop their consumption from Acme Inc. or move to competitors or substitute products e.g cooking at ho…

Oh, I get it, and I've argued that companies like Amazon should be taxed heavily, for these very reasons. It would slow them down, and put them on more equal footing with the other companies they're putting out of business. But every time I bring it up, I get that quip, so I figured I'd start there for a change. ;-)
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