I've been catching up on my reading, bill paying, and other vital tasks that took a distant second place to taking care of my dog, Raven, in the last month. One bit of reading I did today zapped my brain fog better than a triple espresso.
According to Grade the News' Michael Stoll in "Tax push catches freelancers by surprise," if you are a freelance writer and you do business in Oakland, California - by which I don't mean you live there and work there, but just so much as drive into town to interview someone - you owe the City of Oakland business taxes. Not an "income tax," which cities cannot levy under California law, but a business tax. Even if you make only one dollar a year, you owe at least $90 to the city - a Kafka-esque reality that makes regressive taxes look good.
Oakland freelancers have formed a Yahoo group to strategize and organize around this issue. And Media Alliance, a San Francisco-based "29 year-old media resource and advocacy center for media workers, non-profit organizations, and social justice activists," published Stoll's article in the most recent issue of Media File, which is where I read it.
I won't pretend I'm exactly hopeful, though, about sanity ruling the day here. Desperation generally trumps common sense and fairness. And there's no question local governments are getting desperate:
The aggressive rooting-out of freelancers became possible after Assembly Bill 63 of 2001 allowed the state to share federal tax data with local governments. Cities have desperately sought to identify under-exploited revenue sources to plug holes caused by federal and state budget cutbacks and a souring economy. At a time when a growing number of Fortune 500 corporations are paying no corporate taxes at all, local governments have been forced to raise taxes on the smallest of small businesses -- arguably those least able to afford it.
While Oakland appears to have the most draconian interpretation of business tax regulations, this is, Stoll tells us, something that is spreading across the country as towns and cities desperately search for funds to make up for the massive cuts our conservative "small government" administration is happily implementing.
Since "starving the beast" tends to result in actual starvation, infrastructure decay, and other genuine human tragedies, I'm not absolutely without sympathy for the need of local governments to replace this revenue. Add to it that, in California, our governor has been cutting funding to local governments, too, as well as having expensive special elections without paying for them (all of which comes out of local budgets), and my sympathy only increases.
But the fact is, as a freelance editor and writer who works full time for companies all over the country, I simply can't conceive that anyone really expects me to figure out the local business laws and regulations that might, or might not, apply to me, nor pay local taxes in towns I've never even visited.
How absurd can this get? When Stoll contacted the City of Oakland to research his story:
(H)e was told that if he traveled to Oakland from San Francisco to write the article, he would be charged $90 in fees and taxes by the Oakland tax collector for the privilege of writing this story ("doing business in Oakland"). Suffice it to say, he did all his interviews by telephone and e-mail. But the writer was still not off the hook. He still needed to apply for a $25 business license in San Francisco for retroactive permission to write this story. And he discovered that since he wrote a $300 freelance story in 2003, he owes $320 for several years of accumulated business registration fees and penalties.
By this logic, if I fly to Daytona next year to cover the largest reptile and amphibian show in the world for the pet website for which I work as an independent contractor, I am "doing business in Daytona" and would need to find out if I need a business license and to pay taxes. And I guess my home county of Sonoma, CA, could get in on the action, too, because that article I'm researching in Daytona will actually be written in my home office.
This is insanity. Employees doing business in cities where they live, working out of home offices, are not subject to these taxes and fees; only freelancers and independent contractors are. It's not as though I'm not already paying my state and federal income taxes just like employees do, plus my own self-employment taxes at double the rate an employee would pay, plus my own health insurance too.
And it's not like most of us choose not to be employees of the companies we work for. Lots of businesses, small and large, are cutting costs by using independent contractors instead of employees. No benefits, no insurance, no retirement plans, no social security taxes, no payroll tax preparation fees, and hey - they don't even have to maintain an office for us! And now I get to pay fees and taxes I wouldn't have to pay, if I were doing exactly what I do as an employee instead of as a freelancer.
My mother always told me that life isn't fair, and I would have sworn to you I believed it before I was shocked by this article. Maybe I would have been better off with a triple espresso.
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