Fixing independent programmers' no-win scenario (related to Joe Stack)

[Renew Deal]

The actions of Joe Stack, the disgruntled software developer who committed suicide by flying his airplane into the Internet Revenue Service building in Austin, Texas, last week, were callous, selfish, and inexcusable. While in no way condoning his actions, programmers may nonetheless hear a familiar ring in his frustration with a country that seems to actively discourage self-reliance and entrepreneurship, especially in the software industry.

Among the litany of complaints in his articulate (if rambling) suicide note, Stack gave special mention to Section 1706 of the 1986 Tax Reform Act, an obscure law that he claimed reduced him to "a criminal and noncitizen slave." Under the law, certain classes of workers, including anyone who engages as a "computer programmer, systems analyst, or other similarly skilled worker engaged in a similar line of work," are considered de facto employees for tax purposes, regardless of whether they claim to operate their own businesses as independent contractors. The IRS can impose significant tax penalties on companies who hire such workers as contractors rather than full employees, a fact that can make it extremely difficult for self-employed programmers to find work.

Section 1706 was originally sponsored by Sen. Daniel Patrick Moynihan of New York, who hoped that forcing highly paid software developers to become employees would limit their ability to take advantage of tax breaks for small businesses. Ironically, it was also Moynihan who, when a study determined the law was not bringing in the desired tax revenue, tried to have it repealed a year later. He failed, and it's still on the books today.

http://www.infoworld.com/d/developer-world/fixing-independent-programmers-no-win-scenario-764

[blueworld]

1. I find this very confusing

I was an independent data processing contractor for decades. I had the choice to incorporate or not, and I chose not to because of expense vs. income. Most companies have an "approved vendor" list. The companies on the list must provide their own liability insurance etc. and meet certain other criteria. If a contractor incorporates & provides the necessary criteria, they can be put on the vendor list and paid under 1099. This allows them (their company) all the tax benefits of any other corporation.

I chose not to go that route & my business was a "self-proprietor" thing. I worked "through" the approved vendors as an hourly employee under W-4 rather than W-2. True I often had to provide my own insurance but I also made more than twice as much as the companies regular employees. That was the BENEFIT of being an hourly employee.

Stark surely had the same options, as do other DP contractors. Employees have no job security any more either so as I said, I'm confused. What's so terrible about being hourly other than the pain in the neck of trying to find jobs? Have consulting rates dropped that low? Is it more than just job competition because of the economy?

Anyone out there that can clue me in? :shrug:

[Javaman]

2. here's the answer...

stack was a fuck up who hated the world and blamed it for all his fuck ups.

He never owned up to his colossal short comings and thought everyone was out to get him.

Especially a faceless entity like the IRS. Because, without a "face", the IRS can be the cause and blame of all ones problems without having to explain a single thing.

See how it works? as long as the "big brother" (as stack defined it) remains undefinable (other than being a huge government entity), the he can rail on and on, as well as, have equally crazy supporters, without having to define the actual wrong against him or defend against his imagined wrongs. But anyone reading his "manefesto" will quickly draw the conclusion that stark was 51 cards short of a full deck.

To me, stack was nothing more than a quixotic nut bag who refused to pay his taxes.

[4lbs]

4. That seems to be it. That last sentence.

I worked as an "independent contractor" under a PSA (Professional Services Agreement) for a tech company here in CA for about 6 months back in the early 1990s, before being hired on by that same company full-time.

In any case, I knew that the money they were paying me didn't have the taxes taken out. I would have to do that myself. So, when they paid me $800 weekly, I knew to pay about $300 of that to the IRS and state of CA for taxes, FICA, etc., based on the equivalent annual rate if I extrapolated it to a full year.

[blueworld]

7. Well, I agree that he saw himself as an eternal "victim"

I also agree that there was absolutely nothing specific in the manifesto and he blamed everything on everyone else. Your summary is essentially keerect, IMO.

However the reason I posted was the headline in Infoworld. I still do not understand how "DP professionals" and/or journalists can view independent contractors as being in a no-win situation. Thanks for the answer, though.

[Javaman]

9. Ahhhh, I see your point.

That is interesting.

[Greyhound]

3. It's too late to fix this.

Wages have plummeted to the point where a new grad cannot make enough to re-pay the loans they are saddled with, let alone finance a life, even if they are lucky enough to find a job.

Why go to university for years to make $10 - $12 p/hr?

[RKP5637]

6. +1, it's a damn sad state of affairs for graduates and will eventually

cause this nation to really decline when education and hard work are undervalued and seen as not worthwhile.

[Recursion]

5. I still don't get this. 80% of "employers" out there require programmers to be 1099's

Are they all breaking the law?

[blueworld]

8. Well, my confusion was in reverse

It took quite a feat to get on a vendor list for 1099 in the olden days. That's why all the independent contractors I knew were W-4.

If this weren't printed in "Infoworld", I would have passed it off as BS.

[spanone]

10. he didn't commit suicide...he commited MURDER and got killed in the process

[redqueen]

11. Yeah... interesting spin there from Infoworld, calling it suicide. (nt)