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Floorist

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Looming change in worker classification rules will cost small businesses big bucks


The new rules will result in changing the status of countless “independent contractors” to employees. So why is that such a big deal?

Small businesses rely on independent contractors to perform ad-hoc and infrequent tasks that usually do not require the attention of full-time employees. Often called “1099 workers” (thanks to the tax form that needs to be filed with the IRS to report payments over $600), these freelancers (or “gig workers”) are stand-alone entrepreneurs who oftentimes serve multiple customers.

...
the Biden administration feels that these independent contractors need more protections. And so the Department of Labor (DOL) is taking action.
 

Incognito

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It's without a doubt a pro-union and potential government revenue increase to hire these new IRS agents to bust the sham companies created ONLY to allow the employer and employee to pretend to be two distinct business to cheat.

YES, this will on the one hand raise costs. By the same token to the extent they can actually increase revenue (offset by the new IRS expenditure) it can reduce federal and state budget deficits.

Who's in favor of letting tax cheats get away with it because there's barely any IRS enforcement in the area policing "independent contractors"?

I mean, besides the cheaters.

So the questions to be asked are on an individual basis; are these really employees or are they independent contractors? Secondly, can the IRS catch enough cheating, collect the taxes and ACTUALLY increase revenues to the government greater than the cost of the IRS agents?

It's not a difficult moral question. The devil is in the details of implementing policy. My union has talked about this forever.
 

Floorist

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As an independent contractor, I made 3 times what the stores would pay. I bid jobs and worked directly with the customer. One of our local stores paid their installer minimum wage.
 

C.J.

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I’ve been 1099 for the majority of my career and I kinda enjoy it but I think we can all admit that there’s more than enough business, both big and small, that push the boundaries just a little too far.

I’m so close to checking out that I’m not worried about it at all.
 

Floorist

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When I moved back to my hometown in 1992, I was getting $2 a yard and doing 15-20 yards an hour. One local store offered me $4 a hour. They had a guy who had been installing for them for 20 years and that is what he was making.
 

Incognito

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As an independent contractor, I made 3 times what the stores would pay. I bid jobs and worked directly with the customer. One of our local stores paid their installer minimum wage.
I don't see any challenge to that status with your history/circumstance. They're going to go after egregious tax cheats because that's where the money is. That means in BIG MARKETS they'll find stores/shops with dozens of crews and many dozens, if not hundreds of men who are being DICTATED to on pricing, control of schedule and installation methods--------whatever defines the distinction by law.

There's a fairly obvious distinction between employees and independent contractors. The IRS will never have time to chase down small operators in small markets. That would cost more in enforcement than it could raise in revenues.

For every success story I know of where installers make BANK on piece work schemes I know of many more examples where at the end of the story the guys would have been better off classified as employees with Social Security, Workman's Comp and company furnished truck, tools, warehouse and supplies.

In a free market those piece work prices absolutely come down over time to meet the hourly wages. That's actually the whole point of a free market. When the General Contractors out here in the Los Angeles area broke the Carpenter's Union (residential) in the 70s the piece workers hanging drywall were making a small fortune. They're still getting those 1970s prices today only now instead of normal walls the price includes all the fancy cathedral ceilings in those Great Rooms with soffits galore. It's now EXCLUSIVELY done by immigrant-----mostly illegal immigrant labor.

You think they're paying taxes? You think they're independent?
They dont even have Green Cards, let alone a State Contractor's License.
 

Floorist

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Banks will have to report ALL transactions over $600. Even if it is making a rent payment. And if you have a deposit of more than $600, the IRS will want to know where you got the money.
 

Incognito

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Banks will have to report ALL transactions over $600. Even if it is making a rent payment.
I see your obvious privacy concerns even for legitimate operators. This will follow along the same lines as all the other intrusions our technology has allowed into our daily lives. Our emails, phone conversations, text messages are all out there in "the cloud" to be recorded and red flagged by national security agencies.

It's an incremental invasion of privacy that doesn't in the least surprise me and I doubt the general populace will consider the ramifications--------Right to Privacy.

Nowadays, anywhere I go and everything I do I kind of assume Big Brother is watching. Not implying that's a good thing, just a fact of life like the sun rising and setting each day.

When I operated independently I declared virtually all my income, although I did cheat a handful of times using "casual labor" paying cash. I made an honest effort to go legit-----Workman's Comp, SS, UI, Medicare and California Employer ID.

Hiring a guy to sweep and open cartons was incredibly difficult as far as COMPLIANCE. They still send me crap I haven't operated in 20 some years.
 

Floorist

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I paid some people (like my kids) in cash and listed it under petty cash. The sales tax was also annoying. I paid sales tax when I bought carpet and collected sales tax when I sold it. When I went into Kansas, I had to pay sales tax on labor.
I had one regular who would not give me a 1099. He said it cost him money if I reported it. He owned apts and was a house flipper. I think when he collected cash from some renters he gave it to me. Jobs were so easy for him I could not give it up. He would pay any bill without question.
He even hunted me down on a Sunday to pay me because I had not gone to his office to get paid.
 

Incognito

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In the end, they collect 6 billion and spend $35 billion to get the 6.
The increase to the IRS budget for enforcement is going to be $8B a year for 10 years with the expectation they can collect $124B more in revenues per year. Besides that the minimum corporate tax acts like a national sales tax bringing in a couple hundred billion more to the federal government. These are the "Inflation Reduction" points they sold to the Senator from West Virginia to get his tie-breaking vote. Assuming these numbers are anywhere close to accurate gives cover for the downsized (Mini-Me) climate change spending.

The $80B over ten years is now in the budget and WILL be spent. We cant know the actual revenues for 10 years yet but again those expenditures for climate change and whatever else I cant recall right now are budgeted and WILL be spent.

I have to add I approve of strict enforcement of tax law as it's only fair to me as an honest tax payer to not allow so much cheating to go on that ultimately honest taxpayers have to pay for. Something like a national sales tax/flat tax/VAT I believe is inevitable as our citizens are failing with the Honor System our current Internal Revenue Service depends on.
 

highup

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A sales tax would fix a lot, but no way will the rate be set so that it's equal to the way it's done now. It would be a windfall and they'd just blow the additional revenue by trading handouts for votes same as now.
 

Incognito

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A sales tax would fix a lot, but no way will the rate be set so that it's equal to the way it's done now. It would be a windfall and they'd just blow the additional revenue by trading handouts for votes same as now.
There's plenty of ways to create a fair tax system. Mostly you have to start with honest government.
A sales tax would fix a lot, but no way will the rate be set so that it's equal to the way it's done now. It would be a windfall and they'd just blow the additional revenue by trading handouts for votes same as now.
So this is why tinkering around with marginal corrections isn't going to change much. Ultimately, revolutionary changes to Congress and the Constitution are way past due. The same crooked politicians in control of our city, county, state and federal governments are only ever going to design ever more corrupted tax law.............PLUS the added bonus of corrupt enforcement through an Executive and Judicial branch all polluted with the same obscene associations with despicable political parties.

I'm thinking RICO.............busting street thugs, soldiers, pimps, drug dealers is a good thing. Real change comes when you can disrupt the rackets from top down.
 

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