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Comment by strombofulous | Hacker News Reader

Why does it matter where you (physically) step foot? I think WFH has proven that crossing the physical of land barriers is no longer required to do much of anything.

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If a Google employee ostensibly works in “the NYC office” but hasn’t set foot in the office in over >6 months (will be like 15 months by the time Google’s asking people to be back in July), lives in another state (e.g. New Jersey, maybe the employee took advantage of the remote work conditions to Florida or Texas)…how long should New York be able to tax this person despite the fact that they don’t live or work in New York? Google’s also not headquartered in New York. Google could move everyone in the computer to e.g. the Seattle or the Austin office (but are currently refusing to do so) if we’re all working remotely anyway.

As long as he works for NY office he will pay NY taxes. He would need to ask Google to switch his office's location.

I assume Google would have to switch his official status which it may not want to do for various reasons. If I lived in NH (which I don't) and wanted to switch my location from an MA office to remote, the company would have to do paperwork to do so.

Also, they might change their current health benefits as those are often priced & administered according specific geographic regions. Maybe not a big deal between MA/NH but certainly if you switched to remote only from a little farther afield.

The health benefits already have to be set up to account for where the employees actually live rather than where we work on paper. E.g. if an employee lives in New Jersey and commutes into New York, either the health insurance has to cover providers in New Jersey or the employee has to see doctors in New York. It doesn’t solve anything to change an entry in a database and pretend the employee is actually somewhere else.

Because taxes allegedly pay for the government to do things. If you're not setting foot in the state you're not using the infrastructure and services.

I guess arguably the state is also creating the conditions for your job to exist (with infrastructure and services that you aren't paying for), but I sure hope that's not a convincing argument enough for income taxes.

That's about as literally what corporate taxes should be going to as it gets.

If a company in one state wants to employ a remote worker in another state, don't they need to set up a token corporation in that other state for the purposes of that employee's taxes? What marginal value is that state providing in order for that employee to work remotely?

This actually is a big issue. If you have an employee in a particular state, as a company you are now considered to have a presence in that state and would now be required to pay sales tax on sales to customers in that state (I think this used to be only sales people, but now is any employee).

There are a decent number of companies that will let employees work from no-sales-tax states (FL, TX, NV, NH etc) without question, but for other states, if they do much business there but don't already have a "presence" there, then they'll have to start paying sales tax to that state on any business they do there.

This is not true as of this court decision:

https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.

Sales tax needs to be paid regardless of presence.

Wow, that's interesting thank you! I guess that opens things up for remote workers if there's now no "penalty" to go to a state where your company previously had no presence.

Nope, just need to register as a foreign entity.

That can get pricey, in MA it's $500 a year to register as a foreign entity. Then you need registered agents in each state which could be your employee there but maybe you don't want them to do that.

I think you are right about employees. There needs to be some ID associated with state withholdings.

I think you are wrong if they are contractors. You just need to send the IRS the 1099 since there is no withholding done on money paid that way. The person receiving it plus the 1099 I send the IRS is enough for the IRS to confirm the income.

I live in ID and work remotely for a CA-based company. I get paid from the same EIN that people working in the CA office do. Yes, they had to file as a foreign entity and that also means a registered agent in the state, but they also have to pay into Idaho’s unemployment insurance for my wages as well which costs them more than that.

Makes sense. You're an employee. If you were a contractor they wouldn't have to do that stuff and you'd get taxed at a weird rate and have to report it yourself. But you'd have to actually be a contractor for that, if you're truly an employee then it is what it is.

So it sounds like the workaround is that said MA company has to start a NH foreign entity, which I assume is all but free, and have that foreign entity pay the employees. That way they're "working remote" for a NH entity and sidestep all this nonsense.

But it's fair to say... why bother, just go back to using the rules you clearly understood to be fair which you were using earlier this year.

Allegedly. And yet very few tax or government funding systems even attempt to measure usage to determine individuals' tax burden (there are some exceptions, like toll roads). Public schools are obviously paid for by everyone regardless of parenthood. The argument is that education is important to society and that everyone benefits from having an educated population, and yet the amount of funding and the amount of taxes varies wildly from district to district despite students being free to move anywhere they please after they finish their public education.

By that logic, why should MA limit itself to taxing employees of MA businesses. Surely there's plenty of revenue potential in people who have never been anywhere near MA.

Well, that’s kind of my point, except I think a more reasonable direction would be for a state to only take income taxes from someone according to some estimate of how much the state’s actions are responsible for that income, and when the income is from out of state, that estimate should probably be close to zero.

Matt Levine likes to reference a Monty Python bit and say that the optimal tax (politically speaking) is one on foreigners living abroad.

Hence why states ratcheted up hotel taxes to double and triple sales tax rates. Even states with “no” sales tax go out of their way to charge 15%+ on hotel stays.

Legal jurisdictions are still driven by geography. Without either physical presence or legal residence in MA, the government of MA has no authority to demand anything from someone in NH.

MA could charge an MA-based employer a payroll tax for out of state employees, but has no jurisdiction to charge the employees an income tax. A further legal theory is that it it would step on the federal constitutional power to regulate interstate commerce.

'Where you set foot' is actually the most important thing, or else we'd all be paying zero taxes in some state while 'not setting foot there'.

The most obvious artifact of 'where you set foot' is where you have your residence, and for taxation 'how long you're there per year' actually matters.

So if you spend > 1/2 of your waking life in Zone A, but sleep in Zone B ... well, it might make a little bit of sense to have some kind of tax regulation there, or not.

Because you get most services like water, roads, garbage, 'healthcare' where you 'reside' it's probably just easier to make it all about residence and that's that. But again, 'residence' is where you 'set foot the most'.

Because when you walk into some other State’s backyard they have the right to demand a toll.

Somewhat related, if you’re on the books as working out of their backyard, they will again demand a toll.

Because the constitution doesn’t allow states to tax interstate commerce.

Because you drive on that state’s roads, are protected by its police, etc.

These people are not, though, if they're working from home. (I expect that'd be the argument they would make.)

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