Telecommuters May Owe Extra State Taxes 617
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."
And his point is??? (Score:4, Insightful)
Re:SSH? VNC? (Score:5, Insightful)
Re:And his point is??? (Score:5, Insightful)
You're missing the point (Score:5, Insightful)
Re:And his point is??? (Score:2, Insightful)
It's not expecting free beer. It's expecting to pay for beer only when you get beer in return.
Fairtax (Score:4, Insightful)
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.
Re:And his point is??? (Score:5, Insightful)
Welcome to the USA... (Score:2, Insightful)
Re:And his point is??? (Score:5, Insightful)
If they decide to tax this guy under the auspices that he is drawing an income on NY economy, then they should FULLY TAX all of the Indians who work at call centers for NY companies!
Re:And his point is??? (Score:3, Insightful)
Also, since he doesn't have the right to vote there it could be considered taxation without representation.
Re:And his point is??? (Score:2, Insightful)
Re:And his point is??? (Score:2, Insightful)
Re:You're missing the point (Score:5, Insightful)
Soko
Re:And his point is??? (Score:5, Insightful)
New York's laws stop at the New York border.
Tennesee's laws stop at the Tennessee border.
The fact that he did not "actually shift his carcass over the state line" (at least 75% of the time) is highly relevant.
-ajb
Re:So does this mean.. (Score:5, Insightful)
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?
Re:Fairtax (Score:4, Insightful)
Missing the point! (Score:3, Insightful)
Re:You're missing the point (Score:3, Insightful)
Re:Fairtax (Score:5, Insightful)
The extremely wealthy are always going to be the best off at the end of the day. They are, after all, the richest. Any tax system that would break that would break the fundamental laws of the universe. You can't have the extremely wealthy wind up poor after taxes, and vice versa
As far as a tax code going out of its way to help the extremely wealthy, well, all I have to say is that our graduated income tax in the US pretty much proves that we don't have such a tax code.
IANAA (Score:2, Insightful)
Re:How does this apply to DC? (Score:3, Insightful)
(is it a troll if it's true?)
Re:You're missing the point (Score:5, Insightful)
Lots of taxes are without representation. Non-citizens pay taxes, but don't vote. If you travel to another state and purchase goods you may pay sales tax, but not vote. I work in another state and pay plenty of taxes there, but can't vote there.
So, what's representation got to do with it?
He wants to earn money in New York (as they pay him in New York). New York wants to tax that money. The courts say New York has a right to tax income paid in New York. What's wrong with that?
Re:Government Revenue (Score:3, Insightful)
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.
Maybe it's your definition of tyranny (Score:2, Insightful)
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.
Re:Fairtax (Score:5, Insightful)
1. The tax burden shifts from those who work to those who spend. This would now include tourists, drug dealers, prostitutes, children, retirees, etc...
2. You are only taxed on new goods. Sell your used computer, car, house, whatever, without worying about taxes.
3. Every head of household will receive a monthly 'rebate' check from the federal government to reimburse the taxes collected on basic necessities. The closer to the poverty line you are, the larger the check. For instance, a family of four living at the poverty line would receive a monthly check of $497.00, (estimated at the time the Fairtax book was written).
4. Every pay period, you receive your gross wages. No Federal Withholding, no Social Security withholding, no Medicare withholding. Those taxes are paid from the sales tax.
5. No more April 15th. It's just another spring day.
6. Outsourcing of jobs and finances will stop as the flow is reversed to what will become the biggest and best tax haven in the world.
So... do the rich benefit? Sure they do. But not at the expense of the middle-class or the poor. Our current tax system is almost completely broken and needs a major overhaul.
Oh, and sooner is better than later.
Re:And his point is??? (Score:2, Insightful)
Actually, the taxes do exist just to take your money. If, as you say, the taxes exist to pay for things the taxpayer in question uses, then why is one required to pay the tax when one does not take advantage of the benefit? If the government limited taxation to only cover the things one used, then it would be no different than any other private-sector service. Instead, they apply threat of force to aquire from everyone, even those few who do not benefit, the property to pay for services used by (in most cases) the majority of residents. There is a phrase for that: legalized theft.
A government which rested solely on the authority of those governed -- which truly ruled by the consent of those governed -- would have no need for forced taxation, and might as well be replaced by private enterprise. There is no reason why there cannot be private-sector police, arbitrators, roads, etc. The use of force proves that the government has already failed to demonstrate that its taxation is justified.
More Information [volunaryist.com]Re:The system works! (Score:4, Insightful)
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.
Re:Fairtax (Score:4, Insightful)
I respectfully disagree.
People with money may not need to spend it - but they do spend it. How about all those huge mansions that celebrities buy? The cars they drive? The private planes they have?
The problem with income tax is that the government takes your money up front and gives you back a small portion without interest - if you don't owe more than they've withheld, that is. It's much, much more simple to pay as you go. The amount of time that millions of people spend preparing their taxes, keeping records, etc. could be put to better use, could it not?
Income taxes foster tax loopholes. Sales taxes do not.
Re:Maybe it's your definition of tyranny (Score:4, Insightful)
I think you'll also find that libertarians are very well focused on solutions to the problems of "murder, mayhem, and general starvation and deprivation." Most libertarians see these issues as symptoms of the larger problem of misguided gorvernment mismanagement.
Re:Fairtax (Score:3, Insightful)
We have a winner..... (Score:3, Insightful)
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.
Re:Fairtax (Score:3, Insightful)
Ok. So his corporation pays the tax. So what? It still gets paid. Under the current system, that's a write-off for the corporation - which results in less taxes collected!
"You really drank the Fair Tax Kool-Aid, huh?"
(Score:-1, Ad hominem)
Re:Fairtax (Score:3, Insightful)
That's pretty funny. Last I checked, the extremely wealthy pay a smaller portion of their income in taxes as any group except for the destitute. Seeing as most of their income is not wages.
The stated graduated income tax rates are a joke. No person making six figures or more is paying even 25% of their income in taxes each year... unless they are absolute morons. Just forget about those who make 7 figures. Yet I pay 25% of my income in taxes and use all the deductions at my disposal to pay as little as possible.
Addressing the point indirectly (Score:2, Insightful)
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.
Re:Missing the point! (Score:3, Insightful)
There is a concept the businesses more" ilk: businesses do not pay any taxes. 100% of taxes levied against businesses are paid by their customers or the company will go out of business. If you tax the businesses and corporations enough they may no longer be able to pass those costs on to their consumers and will go out of business. Or they might go offshore. But a business never pays taxes out of their own pocket.
Re:So does this mean.. (Score:3, Insightful)
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.
Re:Look at the breakdown of tax returns... (Score:3, Insightful)
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!
Re:Fairtax (Score:3, Insightful)
Stupid public policy (Score:4, Insightful)
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...
Re:Fairtax (Score:4, Insightful)
Why should poor people pay more (in relative scale) than rich?
Even if you can address the equality issue, when you are rich, you have multitude of ways to avoid paying it.
Let's take the Gulf Stream example.
Let's say income tax has been replaced by 30% sales tax on everything you buy. "Well, no problem", says the rich. He just buys the Gulf Stream in France instead of US.
Let's say you somehow close that loop hole (I don't know of any easy ways), "well, no problem" says the rich. He creates a charitable organization which goes out and buys the Gulf Stream tax free and leases it back to the rich guy for pittance.
There is no tax system that cannot be gamed by people with resources to game it.
Re:Fairtax (Score:1, Insightful)
2. You are only taxed on new goods. Sell your used computer, car, house, whatever, without worying about taxes."
Sounds like it would grind the economy to a halt -and have a big impact on R&D of new products- as people would be much more reluctant to buy new goods.
Re:Missing the point! (Score:5, Insightful)
They can also be paid by employees via lower wages, or stockholders via lower profits. Your central point is correct though: every tax is ultimately paid by a human being, but that's not obvious to most people which is why politicians like to "tax" businesses.
Re:Income Tax (Score:3, Insightful)
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.
Re:State screws people who can't screw back... (Score:3, Insightful)
Kind of reminds me of that...
Re:Fairtax (Score:3, Insightful)
How is this different from the current system? You'll pay sales tax when you spend it, unless you spend it all in NH, OR, MT or one or two others. You'll pay a luxury tax if you buy something really big, like an expensive car or boat.
-Charles
Re:Fairtax (Score:3, Insightful)
More income for spending = more spending.
It's simple.
Re:Good news for ending offshoring? No, not really (Score:4, Insightful)
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.
Re:Fairtax (Score:1, Insightful)
Rich people presumably own buisnesses and capital (unless they won the lottery or are Mike Tyson). For buisnesses, taxes are just another cost they have - like fuel prices, labor prices, etc.
Even upper class professionals don't pay taxes, because their services are in demand such as they can pass the cost of taxes on to the consumer of their services, and continue living like they do before.
Taxes eventually trickle down to the middle class and the working class, who have no one left to pass the buck to.
The fair tax doesn't change this... but it solves other problems (removes problems like providing tax incentives to have kids... providing tax disincentives to getting married... etc.)
Re:SSH? VNC? (Score:3, Insightful)
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.