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Except it did, because all revenue generated by your business was made in substantial part by using Californian resources. A resource that, had you not hired th

Except it did, because all revenue generated by your business was made in substantial part by using Californian resources. A resource that, had you not hired them remotely, would have contributed to the Californian economy instead. As such, California has laws in place to recoup those losses. Of course, at some point "one Californian asset" amongst many assets from other states is a drop in the bucket, so there's a threshold, and your business was well above that threshold. Is it questionable phrasing? Yes. Is it wrong? No. Your business clearly and directly derived income from California, and per California law, the state is owed income tax on that. (But is it kind of ridiculous in a modern economy? ...ehhhh it depends. California is one of the few economic powerhouses amongst the states, and there's good arguments to be made for having this system in place. You can argue about the threshold, but the idea that states should not be allowed to recoup economic loss from people being hired out of state without the employer paying back taxes over the income generated through that hire to the state that got them that hire, is not quite thinking it through)

paulgb 5y ago
> all revenue generated by your business was made in substantial part by using Californian resources This is technically true in the sense that zero is a substantial part of zero :)
- TheRealPomax 5y ago
  Even if you treat yourself as employee, a business with two employees, with one of them from California, gives rise to a situation where it can be trivially argued that well over 25% of the business income can be attributed to a Californian workforce (even if the exact contribution isn't 50%, it is most certainly substantial enough to warrant a tax notice)
  - nrmitchi 5y ago
    I'm not sure if you're reading the whole thread here. > well over 25% of the business income can be attributed to a Californian workforce The argument is that the company in question had 0 total revenue. If you want to attribute 25% of that to a California source, sure, but it's still $0.
    - brewdad 5y ago
      When you file your CA tax return, then they will see that there is no money to tax. Without that filing, how would they know?
    - lakis 5y ago
      ok, he has 0 total revenue. No problem. Prove it and then everything is fine. How do you prove it? Fill an income tax return! His complain is that he was "required that my business file an income tax return" . Which is part of proving how much money his business made.
    - TheRealPomax 5y ago
      But of course, a blog post is not proof of income. A properly filled out tax form is. So yes: California absolutely wants you to show that the over 25% contribution by one (or more) of its resident(s) amounted to an income of $0. They are not going to take your word for it, because your word is no good: fill out the paperwork to prove your claim. If you don't, it would be far more reasonable to assume that your business had enough income to pay for their employee (which typically costs a company twice what they actually pay in gross salary), which by definition is a non-zero amount (because under contract law there has to be an exchange of value for a contract to legally exist: you cannot be contracted to work for free).
hermitdev 5y ago
> California has laws in place to recoup those losses. Except this was done across state lines. There's a term for that: interstate commerce. The federal government has the sole power to regulate interstate commerce. California should pound sand here.
- deleted 5y ago
  [deleted]
- tshaddox 5y ago
  The Interstate Commerce Clause says that the federal government has the constitutional authority to regulate interstate commerce, which likely means the federal government could prohibit California from doing this (I say "likely" because "interstate commerce" is complicated and has a long history of court cases). It doesn't say that no state can make any rules whatsoever that affect interstate commerce. Plenty of states have plenty of regulations in place for interstate commerce, including obvious things like inspections at state borders.
- pas 5y ago
  it's not so simple, there are almost surely federal court cases about this that concluded with people paying to the relevant states.
Clubber 5y ago
Typically there is a minimum number of employees required to trigger regulations such as that. For example, you are exempt from the required healthcare mandate if you are under 50 employees, I believe. This is common sense stuff to keep the burden for small fledgeling businesses minimized while extracting ethical employment from large. California obviously doesn't take this approach, so I'm glad I've been informed of it. It's their state, so they can pass whatever laws they want obviously. People living there just be aware that this is incentivizing not hiring remote from California.
- TheRealPomax 5y ago
  Indeed - as a rule of thumb, if you're going to do anything business related across state lines, always consult with both accountants and lawyers specialized in the state(s) you're thinking of getting involved in.
  - HighPlainsDrftr 5y ago
    IMHO - I think this is where we are really screwing up as a society. We shouldn't need accountants and lawyers just to live our lives. We need lawyers when we are in trouble. Need accountants to keep track of our finances. But should we really need them just to live, do something new in an unknown area? My personal opinion is that we spend too much on lawyers and accountants. Our society should be optimized to let people focus on their ideas - bring in cash flow - and lift the entire society up when possible. That said - I'm not sure I have a good solution here. I don't think we should tax income (don't punish people for working). I go back and forth on sales taxes (I kinda like use taxes, but again, that negatively affects a significant amount of the population un-proportionately). A chunk of the world uses VAT. I'm researching VAT closer. We can make this a more fair, easier to operate in world than we have now. I'm a supporter of that.
    - TheRealPomax 5y ago
      We don't need accountants and lawyers just to live our lives. We don't even need them if we have a well paying job, a mortgage, a fulfilling long term relationship, and a clutch of progeny. But we do need them to run a business, because --and this is the part that explains why-- your brain is finite, and you cannot be an expert at accounting, and law, and your actual profession. The willingness to outsource expertise to other people is what makes society possible. As for calling income tax a punishment: that's a bit weird, because you're not paying taxes on "your money", your money is what's left after taxes, the amount before taxes was your employer's money. Only some of that is going to be yours. If you live in the US, you unfortunately live with an idiotic system in which you are handed the full sum, being way more than is actually yours, and then making you responsible for splitting it up correctly and punishing you if you don't. However, if you live in a more modern country, at least in terms of how tax is handled, you wouldn't need to do this at all. The taxes will be withheld as part of the transaction, paid by the party doing the paying, and what is received is 100% the receiver's money, with no further taxes owed. (we see the same idiocy vs. sensibility with sales tax: some countries like Canada or the US have the insane habit of listing untaxed price in stores, with an inflated price at the till. More sane countries instead list the actual price of goods, with the tax processing taking place in the computers that handle the payments) Remember: your country needs to make money for it to stay a country. Setting a rule where any monetary transaction taking place in the nation (made possible only because there is a working national economy in the first place) has to include a portion that gets used to fund the nation that makes the economy possible isn't too crazy. Sales tax, income tax, capital gains tax, etc. are basically all the same thing (money changes hands, the nation gets a portion of it so it so that it can keep operating) using different rates (mostly) adjusted to be appropriate to how much is necessary to prosper. Of course, in a good tax implementation, you don't "get that money and then you have to pay taxes", instead those taxes are withheld as part of the payment and when the tax date rolls over, you have nothing to do (something that a number of countries actually do). It's when you get into levies (property tax, fuel surcharges, etc) that things become a bit more questionable, and one of those "what kind of country do you live in" differentiators.
hungryforcodes 5y ago
He states he didn't make any revenue.
- nrlucas 5y ago
  And Cali. knows that how? This the filing.
unethical_ban 5y ago
>A resource that, had you not hired them remotely, would have contributed to the Californian economy instead. I think an out-of-state employer funneling money into CA via its employee is a benefit, but you make it sound like a drain.
- Root_Denied 5y ago
  More like an opportunity cost. Talking about "lost" payroll and income tax revenue that would have otherwise gone to the state. The employee, living in the state, would have spent their income there regardless of where that income was sourced from so that's not at question here.
AdrianB1 5y ago
> California has laws in place to recoup those losses California does not own the employee, it is no longer the time of slavery. Or it is still slavery in a different form, where states own almost everyone, especially their revenue?
- PaulDavisThe1st 5y ago
  State taxes make it clear that the state has a fully legal claim on some percentage of anyone's income. If you want to interpret that as slavery, go ahead, but that's not very fashionable in legal circles.
  - AdrianB1 5y ago
    Then explain how is that not modern slavery: someone declares rights over you (your income). I don't care what legal circles fashion, the same legal circles in various countries fashioned slavery, genocide, wars etc. without blinking.
    - PaulDavisThe1st 5y ago
      Apparently you take an extreme position on this, in which it is not possible for a society to adopt political processes that end up asserting the collective right to some part of the society's economic output and a mechanism for obtaining that based on taxation ... at least, not without that being termed "slavery". I have no doubt that you can find some sort of analogy that explains how slavery and taxation are equivalent. Good work. I'll be moving on.
- dragonwriter 5y ago
  Look, if you want to expand the definition of slavery to include the power to levy taxes on income, fine, but you aren't speaking the same language as most people at that point and no productive conversation can happen without a shared language.
  - Dracophoenix 5y ago
cryptonector 5y ago
> A resource that, had you not hired them remotely, would have contributed to the Californian economy instead. As such, California has laws in place to recoup those losses. Why not just ban remote work from CA to elsewhere then? The CA citizen, apparently, belongs to CA in your view.

paulgb 5y ago

> all revenue generated by your business was made in substantial part by using Californian resources This is technically true in the sense that zero is a substantial part of zero :)

TheRealPomax 5y ago
Even if you treat yourself as employee, a business with two employees, with one of them from California, gives rise to a situation where it can be trivially argued that well over 25% of the business income can be attributed to a Californian workforce (even if the exact contribution isn't 50%, it is most certainly substantial enough to warrant a tax notice)
- nrmitchi 5y ago
  I'm not sure if you're reading the whole thread here. > well over 25% of the business income can be attributed to a Californian workforce The argument is that the company in question had 0 total revenue. If you want to attribute 25% of that to a California source, sure, but it's still $0.
  - brewdad 5y ago
    When you file your CA tax return, then they will see that there is no money to tax. Without that filing, how would they know?
  - lakis 5y ago
    ok, he has 0 total revenue. No problem. Prove it and then everything is fine. How do you prove it? Fill an income tax return! His complain is that he was "required that my business file an income tax return" . Which is part of proving how much money his business made.
  - TheRealPomax 5y ago
    But of course, a blog post is not proof of income. A properly filled out tax form is. So yes: California absolutely wants you to show that the over 25% contribution by one (or more) of its resident(s) amounted to an income of $0. They are not going to take your word for it, because your word is no good: fill out the paperwork to prove your claim. If you don't, it would be far more reasonable to assume that your business had enough income to pay for their employee (which typically costs a company twice what they actually pay in gross salary), which by definition is a non-zero amount (because under contract law there has to be an exchange of value for a contract to legally exist: you cannot be contracted to work for free).

hermitdev 5y ago

> California has laws in place to recoup those losses. Except this was done across state lines. There's a term for that: interstate commerce. The federal government has the sole power to regulate interstate commerce. California should pound sand here.

deleted 5y ago
[deleted]
tshaddox 5y ago
The Interstate Commerce Clause says that the federal government has the constitutional authority to regulate interstate commerce, which likely means the federal government could prohibit California from doing this (I say "likely" because "interstate commerce" is complicated and has a long history of court cases). It doesn't say that no state can make any rules whatsoever that affect interstate commerce. Plenty of states have plenty of regulations in place for interstate commerce, including obvious things like inspections at state borders.
pas 5y ago
it's not so simple, there are almost surely federal court cases about this that concluded with people paying to the relevant states.

Clubber 5y ago

Typically there is a minimum number of employees required to trigger regulations such as that. For example, you are exempt from the required healthcare mandate if you are under 50 employees, I believe. This is common sense stuff to keep the burden for small fledgeling businesses minimized while extracting ethical employment from large. California obviously doesn't take this approach, so I'm glad I've been informed of it. It's their state, so they can pass whatever laws they want obviously. People living there just be aware that this is incentivizing not hiring remote from California.

TheRealPomax 5y ago
Indeed - as a rule of thumb, if you're going to do anything business related across state lines, always consult with both accountants and lawyers specialized in the state(s) you're thinking of getting involved in.
- HighPlainsDrftr 5y ago
  IMHO - I think this is where we are really screwing up as a society. We shouldn't need accountants and lawyers just to live our lives. We need lawyers when we are in trouble. Need accountants to keep track of our finances. But should we really need them just to live, do something new in an unknown area? My personal opinion is that we spend too much on lawyers and accountants. Our society should be optimized to let people focus on their ideas - bring in cash flow - and lift the entire society up when possible. That said - I'm not sure I have a good solution here. I don't think we should tax income (don't punish people for working). I go back and forth on sales taxes (I kinda like use taxes, but again, that negatively affects a significant amount of the population un-proportionately). A chunk of the world uses VAT. I'm researching VAT closer. We can make this a more fair, easier to operate in world than we have now. I'm a supporter of that.
  - TheRealPomax 5y ago
    We don't need accountants and lawyers just to live our lives. We don't even need them if we have a well paying job, a mortgage, a fulfilling long term relationship, and a clutch of progeny. But we do need them to run a business, because --and this is the part that explains why-- your brain is finite, and you cannot be an expert at accounting, and law, and your actual profession. The willingness to outsource expertise to other people is what makes society possible. As for calling income tax a punishment: that's a bit weird, because you're not paying taxes on "your money", your money is what's left after taxes, the amount before taxes was your employer's money. Only some of that is going to be yours. If you live in the US, you unfortunately live with an idiotic system in which you are handed the full sum, being way more than is actually yours, and then making you responsible for splitting it up correctly and punishing you if you don't. However, if you live in a more modern country, at least in terms of how tax is handled, you wouldn't need to do this at all. The taxes will be withheld as part of the transaction, paid by the party doing the paying, and what is received is 100% the receiver's money, with no further taxes owed. (we see the same idiocy vs. sensibility with sales tax: some countries like Canada or the US have the insane habit of listing untaxed price in stores, with an inflated price at the till. More sane countries instead list the actual price of goods, with the tax processing taking place in the computers that handle the payments) Remember: your country needs to make money for it to stay a country. Setting a rule where any monetary transaction taking place in the nation (made possible only because there is a working national economy in the first place) has to include a portion that gets used to fund the nation that makes the economy possible isn't too crazy. Sales tax, income tax, capital gains tax, etc. are basically all the same thing (money changes hands, the nation gets a portion of it so it so that it can keep operating) using different rates (mostly) adjusted to be appropriate to how much is necessary to prosper. Of course, in a good tax implementation, you don't "get that money and then you have to pay taxes", instead those taxes are withheld as part of the payment and when the tax date rolls over, you have nothing to do (something that a number of countries actually do). It's when you get into levies (property tax, fuel surcharges, etc) that things become a bit more questionable, and one of those "what kind of country do you live in" differentiators.

hungryforcodes 5y ago

He states he didn't make any revenue.

nrlucas 5y ago
And Cali. knows that how? This the filing.

unethical_ban 5y ago

>A resource that, had you not hired them remotely, would have contributed to the Californian economy instead. I think an out-of-state employer funneling money into CA via its employee is a benefit, but you make it sound like a drain.

Root_Denied 5y ago
More like an opportunity cost. Talking about "lost" payroll and income tax revenue that would have otherwise gone to the state. The employee, living in the state, would have spent their income there regardless of where that income was sourced from so that's not at question here.

AdrianB1 5y ago

> California has laws in place to recoup those losses California does not own the employee, it is no longer the time of slavery. Or it is still slavery in a different form, where states own almost everyone, especially their revenue?

PaulDavisThe1st 5y ago
State taxes make it clear that the state has a fully legal claim on some percentage of anyone's income. If you want to interpret that as slavery, go ahead, but that's not very fashionable in legal circles.
- AdrianB1 5y ago
  Then explain how is that not modern slavery: someone declares rights over you (your income). I don't care what legal circles fashion, the same legal circles in various countries fashioned slavery, genocide, wars etc. without blinking.
  - PaulDavisThe1st 5y ago
    Apparently you take an extreme position on this, in which it is not possible for a society to adopt political processes that end up asserting the collective right to some part of the society's economic output and a mechanism for obtaining that based on taxation ... at least, not without that being termed "slavery". I have no doubt that you can find some sort of analogy that explains how slavery and taxation are equivalent. Good work. I'll be moving on.
dragonwriter 5y ago
Look, if you want to expand the definition of slavery to include the power to levy taxes on income, fine, but you aren't speaking the same language as most people at that point and no productive conversation can happen without a shared language.
- Dracophoenix 5y ago

cryptonector 5y ago

> A resource that, had you not hired them remotely, would have contributed to the Californian economy instead. As such, California has laws in place to recoup those losses. Why not just ban remote work from CA to elsewhere then? The CA citizen, apparently, belongs to CA in your view.