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."
SSH? VNC? (Score:3, Interesting)
Re:SSH? VNC? (Score:5, Insightful)
Re:SSH? VNC? (Score:3, Funny)
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:Good news for ending offshoring? No, not really (Score:3, Informative)
The low 50% of wage earners earn less than 2% of the total income in the US, meaning that the top 50% of earners are not pulling their weight.
More to the point, the top 10% of earners earn _way_ _way_ more than 10% of the income, (I believe it's on the close order of 90% but I can't confirm it) yet pay way less than the correct proportion.
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:Good news for ending offshoring? No, not really (Score:3, Interesting)
Go read up on John Rawl's [wikipedia.org] and The Veil of Ignorance [stanford.edu]. The basic idea is that before you are born, you don't know if you will be born as the gifted child of a wealthy family or a mentally handicapped child of a poor family. What tax system would you choose for the society you will live in before you discover the actual alternative into which you are born? Is it fair to newborn children
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 problemat
Re:SSH? VNC? (Score:3, Informative)
This has been tax law for ages. If you live in one state and work in another, whether driving over the state line to work in an office, or telecommuting in, you owe taxes in both states. That's why you make sure you register your residence in the same state as your job, for the purposes of taxes. It certainly doesn't help his case that he was physically in NY 25% of the time, although many states allow you to deduct taxes paid to another state on a given income from the amount you owe them.
This also ope
Re:SSH? VNC? (Score:3, Informative)
This has been tax law for ages. If you live in one state and work in another, whether driving over the state line to work in an office, or telecommuting in, you owe taxes in both states.
I'm not a tax expert, but I do know how my own taxes work and I'm pretty sure what you just said is not right. As a consultant, I work in many different states during the year, and my firm keeps track of how many of my billable hours are in each state. At the end of the year, I file taxes by state based on the time I w
I am turning in the editors (Score:2, Funny)
INFORMANT FORM
Name: Robert Malda
Aliases: CmdrTaco, (1)
Residence: Michigan
Company: Slashdot (OSDN)
Occupation: Human dupe machine, spellcheck input tester
Taxes Owed: 120 months
Salary: $0.02/click
Short sighted states (Score:3, Interesting)
But this is just short-sighted. Business will just go to states with more tax-friendly policies or maybe offshore.
Re:State screws people who can't screw back... (Score:3, Insightful)
Kind of reminds me of that...
Re: (Score:2, Interesting)
Re:The system works! (Score:2)
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: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.
And his point is??? (Score:4, Insightful)
Re:And his point is??? (Score:5, Insightful)
Huh? (Score:5, Informative)
You're missing the point (Score:5, Insightful)
Re:You're missing the point (Score:5, Insightful)
Soko
Re:You're missing the point (Score:2)
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:You're missing the point (Score:3, Informative)
I think whatever state the company your working for is in, despite your physical location, is the state who you should pay taxes to- for the time worked for that company only- and not have to pay it again in your home state.
Now here's a bonus question, I'm an independant contractor from Iowa, but my main client is out of california. I'm technically an employee of myself, but am receiving 'employment'/work from CA. Am I exempt from CA taxes
Representation (Score:3, Informative)
Taxation without representation was one of the big gripes that the American colonists had with England, their mother country at the time. The crown was increasing taxes on the colonists to help raise funds that were depleted during the French and Indian War, but was not giving them representation in Parliament.
A couple hundred years later, we like to believe that the ideals expressed during the founding of the country are still important, so a complaint such as
Re:You're missing the point (Score:3, Funny)
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
Re:You're missing the point (Score:3, Insightful)
Re:You're missing the point (Score:2)
Re:You're missing the point (Score:5, Funny)
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.
Re:And his point is??? (Score:2, Informative)
Re:And his point is??? (Score:5, Insightful)
Re:And his point is??? (Score:2)
Except that he does see benefit from the services those taxes provide. Most of the services you mention are local services, anyway -- not state services.
Second, that job that he telecommutes to wouldn't exist without the services that NYS provides to his company.
Missing the point! (Score:3, Insightful)
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 th
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:And his point is??? (Score:2)
So if he's a consultant who occasionally travels to 3-6 states where his client base exists while living elsewhere, he should pay the full tax rate for each state based on your logic? That's ridiculous, regardless of how many services a state is providing to his clients.
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:2, Insightful)
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: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:And his point is??? (Score:2)
I think the objection isn't to the taxation so much as to the fact that you could wind up liable for taxes on the same income in two states at the same time, which seems fundamentally unreasonable.
Re:And his point is??? (Score:2)
Er... physical presence is just about the FIRST thing I think about when wondering if I'm subject to the laws of any given place.
Serves 'em right! (Score:4, Funny)
As it becomes more commonplace, congress will figure it out. They always do, right?
So does this mean.. (Score:5, Funny)
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: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
Re:So does this mean.. (Score:5, Interesting)
-Colin [colingregorypalmer.net]
Re:So does this mean.. (Score:3, Informative)
The government is not in the business of charging use fees instead it is like having insurance; you hope to god you won't need the military to come in and get your butt out of Sudan but you are really happy that th
Re:So does this mean.. (Score:3, Interesting)
And it's usually not as bad as you make out. With many countries (Canada for sure, don't know about others), the US has tax treaties that specifically avoid this double-taxation. With Canada, the US wa
Taxes? (Score:3, Informative)
Re:Taxes? (Score:5, Informative)
It's also exempt from Income Tax. I think you also have to be on an overseas payroll. If you're on the payroll of a US company, they still take out FICA/Medicare.
HOWEVER, you MUST be out of the US 330 out of a 365 day period. For example, if I leave the US on 01-NOV-2005, then until 01-NOV-2006, I can only be in the US a total of 35 days, or else I owe taxes on that 80,000. There's a form you fill out with your employer (I think its form 679... I just did mine for 2006) that will keep your employer from deducting any taxes on the first 80,000.
Re:So does this mean.. (Score:4, Informative)
For your perusal: Renunciation of U.S. Citizenship [state.gov] right from the State Department.
Note that this doesn't excuse you from prior taxes or other financial obligations in the US.
Income Tax (Score:3, Interesting)
Re:Income Tax (Score:3, Funny)
So, how should the government generate revenue without an income tax? Sales tax? Property tax? Estate tax? Donations?
Government Revenue (Score:2)
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.
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
libertarians? (Score:2)
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 opport
Why not tax me for working out of another state? (Score:3, Interesting)
I worked as a flight attendant. I was based out of a nearby state. And very often, I would be sent to other airports to work out of there. So, could I possibly owe taxes in every state I worked out of?
I know this is telecommuting, but the idea is the same, I technically lived in one state and worked out of many others...
Stupid...
Last Year I Paid Taxes in 5 states (Score:3, Interesting)
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:Fairtax (Score:4, 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.
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 inco
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:3, Interesting)
Actually, the scenario that I described with the jets occurs today. It is one of the most abused tax evasion scheme.
Today, if you take a ride on a "corporate jet" for a private purpose, all you have to report on your income tax is the equivalent cost of a commercial flight. It is a specific benefit written into the tax code by your Congress.
This means that if I am Jack Welch, I can use GE corporate jet to go vacation in Hawaii (which probably cost the company
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.
Sigh (Score:3, Informative)
thus hurting the people in the lowest income levels. Many of those people wither don't need to pay taxes i.e. EXEMPT or low income person who gets most, if not all, of there money back.
"2. You are only taxed on new goods. Sell your used computer, car, house, whatever, without worying about taxes."
The volume of lost tax revenue on home sales alone would intitute a huge amount of maoney you will need to recoup. That for the times you actuall ke
Re:Fairtax (Score:4, Interesting)
Also, this aligns government with the preservation and increase of wealth in its citizens. After all, under your current scheme, government has a strong incentive to increase spending on new goods in order to increase tax revenue. OTOH, if they can only tax assets, then they have a strong incentive to increase the value of assets in order to increase revenue.
This scheme also drives up the cost of goods and services and makes the cost of taxation less transparent to the end user. That adds economic inefficiency to the system and hides important information from the citizen (namely, how much of your money went to government?).
Re:Fairtax (Score:3, Insightful)
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.
Re:Fairtax (Score:3, Insightful)
More income for spending = more spending.
It's simple.
Re:Fairtax (Score:3, Informative)
Every tax proposal I see somehow provides extreme benefit to the extremely wealthy. Is the fair tax any different?
Don't confuse income and wealth. They're not the same thing at all.
Compare the widow that owns her home and has $1,000,000 in the bank making 3% interest and the programmer making $50,000 with a mortgage.
Her income is just $30,000/year compared to the programmer's $50,000, yet it's obvious she's more wealthy.
This is how rich New England Democrats can get away with advocating "taxing the wealthy"
Re:Fairtax (Score:3, Informative)
Not to mention that the really, really rich (like >1 million in investments) generate their money via capital gains which is an entirely different issue.
So while the "nominal" rate in some of these systems (fair tax, sales tax, etc) may appear to decrease we must realize that the really rich aren't paying the so-called nomi
Re:Fairtax (Score:3, Insightful)
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: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: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.
Welcome to the USA... (Score:2, Insightful)
Ironically the Military is the Reverse (Score:5, Interesting)
Caveat: This might have changed in the past 4 years, but I know in 2001, that's how it worked. The military has been, as of late, cracking down on people who claim non-tax states as their home while having no plans of ever actually living in that state or having any ties in that state.
Re:Ironically the Military is the Reverse (Score:4, Interesting)
When I was in California between 1992 and 1996, the legislature passed a law defining what qualified a person as a resident of California. If I recall correctly, the criteria were any two of home ownership, driver's license and (I think) a certain time of continuous residence. The net result was that most military members would end up being California residents (according to California) and would have to pay income tax, even if their official state of residence was elsewhere (and where they were also paying income tax). The DoD pounced on that very quickly and it was successfully challenged in court.
-h-
How does this apply to DC? (Score:5, Informative)
Re:How does this apply to DC? (Score:3, Insightful)
(is it a troll if it's true?)
Re:How does this apply to DC? (Score:3, Informative)
Re:Have a reality check (Score:3, Informative)
Make another corporate entity? (Score:3, Interesting)
That really screws the 10-500 employee businesses that make up the backbone of the US economy, of course. They have too much infrastructure to just go ahead and do this for the fairly nominal setup cost a small company would encounter, but too little to already be incorporated in multiple locations.
Remote Web Hosting (Score:2)
Great way to ruin an already hurting industry.
Anyone in washington remember the golden goose story?
I think I speak for everyone here.. (Score:2, Funny)
I'm willing to bet... (Score:3, Informative)
Hmmm.... (Score:4, Interesting)
Of course, if TN has no income tax, I guess there would be no credit for it on this guy's NY taxes. *shrug*
IANAA (Score:2, Insightful)
What defines where you did work? (Score:3, Interesting)
This opens a great big mess-o-worms.
No Taxation Without... (Score:3, Informative)
First, this is wrong. The states may fight over who gets to tax him, but in the end he'll only pay taxes to one state. (Yes, my wife is and accountant.) You are able to deduct taxes you pay in one state against taxes owed in another state.
Second, if he's paying taxes to NY he ought to be demanding the right to vote there. It's taxation without representation (and the right to vote against people who impose such taxes) otherwise!
Now that would make a great Supreme Court case. The guaranteed right to vote in any state that collects anything above a certain percentage of your income in taxes.
Third, I wonder if that includes City and Burough taxes in NYC?
Re:Is this a new issue? (Score:5, Informative)
Yup. I live in NJ, work in NY. Pay income taxes to NJ, NY, Federal Government. If they reinstate the commuter tax in NYC, I will also pay income tax to NYC (I did until about 4-5 years ago). Pay sales tax in NYC to the city, the county, and the state. Pay sales tax in NJ to the state. Pay property tax to my municipality in NJ. My wife pays gas tax in NJ -- I take mass transit (but still pay for roads via taxes).
The way I see it, people should pay income tax in the state that they earn the income, not the state in which they reside. If my home state wants to tax me for simply importing cash into their state, that's a problem -- since import taxes between states are illegal in the US. Besides, when I spend cash in NJ, they get to tax it then.
Re:Is this a new issue? (Score:2)
Re: (Score:2)