Our 15-year-old son, Neil, works once a week at the family business, and earns about $1500 each year. For this we issue him a 1099 form every year reporting his income to himself, the IRS, and the State of California, and he files a tax return and pays his 12.5% self-employment tax.
In reward for his conscientiousness, he today received a nasty letter from the City of San Jose, oh-so-generously offering him “amnesty” for not having had a $150 business license last year, and letting him get his $150 business license for this year, without the massive fines they could impose. Government tax agencies are like cold call telephone scammers, once they find a mark, that mark’s number gets shared with everyone else who could fleece the victim out of a few more bucks. One way or another, the City of San Jose got a list of everyone in the city who had the chutzpah to report non-employee compensation on a tax return without having a business license. Shame on you, oh, babysitters, and paperboys. Shame on you, lawn mowing teens, summer fruit pickers, and freelance lifeguards. You have not shared your $600, $800, or $2000/year income with the city coffers, and you shall pay, ere the police (city employees themselves) haul you in for your criminal violation, and make a mugshot you can attach to the business license you thought you didn’t need.
Both Peter and I were agog. I called the finance department, explaining that he is only 15 years old, and he’s working for his parents. Forget about it, I was told. Perhaps, as a minor, if he cared to send in a copy of his birth certificate, they might let him file for an exemption — at the rate of $38/per year. Lucky boy, besides paying taxes, he gets to throw away another day’s income for the “administrative fee” to get the city off his back for another year. I’m sure the city will collect quite a pretty penny from all the people who were suddenly charged with having a business, even if they worked independently for other businesses at different sites, sold stuff from home on eBay, or have successful garage sales. But I can also guarantee they will never see that money again, as the poor victims of the city’s overreach the pittance they have left after the city’s taken its huge bite (which by the way is $300/year if you’re a poor sod who resides downtown) is not worth the effort.
Meanwhile, the city is already proposing a new tax to pay for the road repair they’ve neglected for years, never mind that heretofore that cost was always covered by the general fund. The general fund apparently no longer pays for anything the public wants. Libraries are closed half the week, and the city laid off a large chunk of its police force to save on pension costs. The general fund, however, seems to have no problem continuing to support a badly run mansion/hotel/resort no one wants to use, a municipal golf course in a city where the most popular recreational sport for adults is soccer, full color mailers on a pointless bag law, and a crew of enforcers whose entire job consists of harassing small businesses.
I called our city councilman’s office. Luckily, our district councilman is Johnny Khamis, the only pro-business councilman, and he only narrowly won over a union tool. Sarah Wright in his office was sympathetic, and put in a few calls on Neil’s behalf, to no avail. A savvy friend advised me Neil could just tell the city to stuff it, since violating business tax law isn’t a crime that juvenile hall will enforce, and non-criminal cases don’t get waived into adult court. But I don’t like that risk. The city is rapacious; maybe they’ll find a way to charge the parents; maybe they’ll find a way to ban Neil from ever having a real business, the kind that has employees and an office, just like his dad’s, in San Jose. But then again, maybe he’ll have learned by then to look for an office in Campbell or Santa Clara, where you pay less than his “exemption fee” to run a business, and you don’t get harassed for it, as you do paying $300 a year in San Jose.