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…
Long time lurker, first time commenting, but I think this may apply to me. The company I work for now has me classified as an independent contractor (I do web development work) but you would think that I'm an employee by the way they treat me. My pay is salary based, I have to be available between the times they specify, I speak directly to a "supervisor", I have paid holidays/vacations and sick days, and I'm not all…
How a Tax Law Helps Insure a Scarcity of Programmers (1998)
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Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#92I 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…
To fix it you need to adress the problem at the root: employees are too expensive because of all the tax laws involved, so businesses started to game the system by turning employees into contractors. Because of this the IRS had to develop a whole set of complicated rules to avoid this abuse.
Solution: abolish all the taxation overhead for employees which was the problem in the first place.
Result: Companies will be motivated to hire more people as employees again reducing the number of unemployed, at the same time there will be no worries about having actual contractors, since there will be no more draconian tax laws to begin with.
This is just another example where an originally good idea(all the taxes on the employer which were supposed to help the employee) turned out to have disastrous consequences.
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#93Earlier 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?
I am not a lawyer, or an accountant, or anything like that.
My understanding is that for federal Canadian corporations a certain percentage (I think 25%) must be Canadian residents.Before doing anything like registering a company in another country it would be advisable to consult an accountant.
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#94I 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…
The law sounds really draconian, however keep in mind that the governments wants there share of the money (plus your first born, a kidney and some blood). E.g if a person is an employee but is classified as contractors they can deduct their home office, travel to and from the office, clothing, going out for lunch, anything you buy computer related. The government comes up with some rules that determines if you are an employee or contractor. If the government decides that you should have been an employee they get all pissy since they perceive that you are trying to screw them out of money.
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#95I 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.
Does it involve small planes by any chance?
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#96Earlier quoted context omitted.
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/hou…
With an agency, you need to consider the following: 1. As you note, they take a percentage of your billable rate, sometimes as high as 50%. 2. In most cases, you need to be a W-2 employee in relation to them and this means you get all of the drawbacks of being an employee without any of the benefits (agencies normally do not offer vacation time, health insurance, profit sharing, stock options, or other perks of emplo…
> you need to be a W-2 employee in relation to them
So if you start your own "placement agency" and hire yourself as a W-2 employee, and then sell your company's and your services, the IRS will be happy? How is this different from just incorporating yourself?
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#97Earlier quoted context omitted.
So was the soviet society stable and free?
Your statement attempts to show evidence that a society with no wealth diversity is unstable. That has no bearing on the original hypothesis that high diversity is unstable. Still it fails in this attempt because the historical instability in Communism has always been due to high wealth diversity that arises from political corruption, which ironically supports the original hypothesis. So... try again?
ynniv - you got him all wrong. He said "Extremes in wealth are not compatible with a stable free society." Could he be any clearer? Everything you said agrees with that.
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#98Earlier quoted context omitted.
So if you actually want to be a contractor because you prefer the freedom of owning your own business and the IRS tries to come in and classify you as an employee, then you get to tell them "no I really am a contractor" and they have to stick with that?
This whole area is, in a sense, like a rigged game because the tax laws are so heavily weighted in favor of wanting to classify people as employees. Therefore, if you try to claim you are a contractor, this will be given only the slightest weight, if any at all - in other words, in your words, they don't have to stick with what you say, and indeed normally won't (they will just apply their multi-part test and come to…
Keep history in mind. The contractor/employee laws are by-products of the New Deal and related periods. They are results of the need to PROTECT employees and keep employers from abusing them.
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#99I 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…
I seem to recall that at one point in american history^1, courts could and would strike down laws that were deemed unnecessarily esoteric to the point that they were incomprehensible to the "common man". when you see a system with decades or even centuries of regulations built up via 'regulation, loophole, regulation etc.' you have to wonder if we don't need a clean sheet design. 1. inherited from european common law…
A court has the power to strike down laws for a variety of reasons. Only CRIMINAL laws tend to be held to the standard of review you are referring to. A few torts will be as well (for example Assault or Battery civil laws.) But generally to be more accurate you would need to say that the law CAN be struck down if the INTENDED CLASS is able to neither determine its meaning NOR guess it from their experience. Courts will do anything they can to uphold a statute.
BUT the above discussion is both correct and incorrect. A trial court can strike down a law that has not previously been ruled on by a higher court. So if the U.S. Supreme Court has ruled on it no other court in the country can do anything about it ever. (more or less. They might rule around it or strike it down on different grounds.) If the U.S. Supreme court hasn't ruled on it then the court is free. It is more complicated than that because the relation between state and federal courts is being ignored here.
For the most part laws are only struck down for being unconstitutional for one reason or another. You are referring to when a law is "unconstitutionally vague."
Finally - The American Common Law tradition specifically comes from English Common Law. Continental Europe used, and still uses, the Civil Code system which is based on Roman and then Napoleonic Codes.
Re: How a Tax Law Helps Insure a Scarcity of Programmers (1998)
#100Earlier quoted context omitted.
Are you at risk? The law exists to protect you from exploitation - worst case they'd have to pay your self employment tax (7.5%), give you benefits, etc. right?
some would say that the law exists so that i have to go through some contracting house which eats 50% or more of my wage up front. To me, it seems more like ensuring exploitation than preventing it.
That may be - but in the case he described he has already been paid as a direct contractor.