[Discuss] Mass. outlawed independent contractors in software and other creative professions in 2004

[jim at gasek.net (Jim Gasek)]

Mark:

Yes, the below is IMHO correct, but the issue is much bigger than
that.  For example, Workers Comp.  The government was aware of the
fact that it was "difficult to tell" who was covering workers 
comp, and they hated that.  So, they made the end customer
(deepest pockets) responsible for ensuring somebody was. 
Just one small "administrative law" example.   

Government wants the masses to think that all forms or labor, all
structures of entities through which people can bill are "tax
neutral".  I.e., it doesn't matter how you structure it, the
same amount of tax is owed, regardless.

Trusts, corporations, LLCs, aka "persons"; "individuals", 
all have very specific meaning in law.  Law is all about 
specific meaning.  

Tax neutrality is a fairy tale that insatiable government 
hopes everyone believes.  

Mechanically, more complex structures make the tax agencies 
work harder to pin the tail on the donkey.  Legally, less
conventional structures highlight (let's call them) "Liability
holes" in jurisdiction.  I've been blessed to be a witness
to many of the legal battles in this and related areas.  

This is a blog about *nix and computer contracting, so I
won't continue down the above train of logic (although I know 
that many on this list know the real story), suffice it to 
say that all these actions by the government are aimed at 
maximizing tax revenue.  It has nothing to do with fairness.  
If computer workers wanted fairness, they would need to hire 
people to lobby and play the same games (in representative 
government) that the unions play.  

I'm not a lawyer giving legal advice, or an accountant
giving tax advice.  To do so would be technically illegal 
(nice, huh?).

To give advice in these areas is regulated by government,
just as doctors are regulated in giving a medical prognosis.  

What I would advise is NOT always to believe the so-called
"experts", and conventional wisdom, and do the research 
yourself regarding these very well researched areas.  

It all begins in Philadelphia in 1776.  It is quite a story.
You have to start at the beginning for it to make sense.

Some things have changed in 225 years, but many technically
remain the same, at least in theory.   Unfortunately, the 
courts have been assigned the role of "umpire", and have not
been doing their "check and balance" thing very well.  

Thanks,
Jim Gasek

--- mbr at arlsoft.com wrote:

From: MBR <mbr at arlsoft.com>
To: "Edward Ned Harvey (blu)" <blu at nedharvey.com>
Cc: Joseph Guarino <jguarino at evolutionaryit.com>,	"discuss at blu.org" <discuss at blu.org>
Subject: [Discuss] Mass. outlawed independent contractors in software and other creative professions in 2004
Date: Tue, 30 Jul 2013 23:46:56 -0400

The cracking down on companies using contractors instead of employees is 
another case of state legislators discriminating against software 
developers and other professions that create intellectual property.

People who create intellectual property often want to be independent 
contractors.  Among other things, if you're forced to be a W-2 employee 
rather than an independent contractor, you lose any right to anything 
you create.  It's fairly common for a programmer to do similar projects 
for clients, and over time to factor out the commonalities in the code 
he creates for each one and assemble a collection of his code that he 
can customize for subsequent clients.

A 2004 change to Mass. law that software temp agencies have only 
recently discovered, makes it effectively impossible for programmers and 
people in other professions who create intellectual property to operate 
as independent contractors.  And that means they can no longer own what 
they create.

The 2004 law was passed because construction workers and other unionized 
workers were finding that employers were forcing them to set up phony 
independent contractor status so the employer could get out of providing 
benefits.  And since union leaders and politicians are often 
buddy-buddy, the Mass. legislature passed an overbroad law to help out 
their union cronies without giving a damn about the havoc they'd be 
causing to software engineers, even though software is one of the 
biggest parts of the state's economy.  It took several years before the 
law actually filtered down to clients, but now I'm hearing that nobody 
in the country will hire an independent software contractor from 
Massachusetts.  Same goes for writers, artists, etc.  See 
http://www.wbur.org/2010/06/30/independent-contractor-law.

    Mark Rosenthal
    mbr at arlsoft.com <mailto:mbr at arlsoft.com>


On 7/30/2013 4:50 PM, Edward Ned Harvey (blu) wrote:
>> From: discuss-bounces+blu=nedharvey.com at blu.org [mailto:discuss-
>> bounces+blu=nedharvey.com at blu.org] On Behalf Of Joseph Guarino
>>
>> What were they thinking?  As a political independent I'm not opposed to
>> taxation but I am opposed to them being unfairly levied against
>> industries we should be trying to encourage to stay in the state.
> It's a use tax.  Amazon and rackspace are not located in MA, but the consumers in MA have to pay the tax.  So I don't really think it fairly or unfairly pushes tech jobs out of the state.  Unless your job happens to be a big consumer of such products.
>
> They conceived it during the economic downswing.  At that time, I saw them cracking down hard, on things they had let slide for years.  To gain revenue.  I know at least 3 companies that got suddenly smacked with taxes and fines for using contractors instead of employees - Companies which were 100% above board.  But they have a good estimate how much it will cost you to defend your case, so they just fine you some amount below that level, knowing that most businesses will simply pay it off rather than fight it.  This happened with 2 out of the 3 companies I mentioned.  The 3rd one decided to contest the charges, and as predicted, got the fines dismissed at a cost higher than the fines themselves.
>

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