Taxing Matters

You're homebased. You add money into your local economy but take none out. So why should you be taxed?
Magazine Contributor
4 min read

This story appears in the December 2000 issue of Subscribe »

Cities are greedy and here's proof: A few years ago Los Angeles enacted a "Home Occupation Permit" program to nick homebased businesses for a $25 fee. But hold on, because this ride turns strangely reminiscent of Chinatown, a classic film about corruption in the City of Angels.

In Los Angeles, this plot thickened because the Writers Guild of America (WGA)-the powerful union for screen and TV writers-took a look at Los Angeles' grab for cash and yelled foul. Why? Many Hollywood writers live in Los Angeles, and the WGA opposed not just the payment of a fee, but the notion of a writer being forced to register with the government. Keep in mind that during the McCarthy era, many WGA members took severe beatings-quite a few were blacklisted and denied work-and so the WGA is skittish whenever the government knocks on its members' doors.

Whoosh, political levers were pulled and soon enough, Assemblyman Tony Cardenas carried a bill in the state legislature to prohibit cities in Los Angeles County from requiring permits, licenses or business taxes of writers who work from home. Meanwhile, the L.A. City Council kicked into gear and-prompted by councilwoman Laura Chick--it passed a measure exempting writers from buying home occupation permits.

Chew on that. Say you're an accountant-tough luck, you still pay the tax. Or you're a political consultant-too bad, cough up the dough.

Is this strange or what?

Now, at day's end, none of this matters to me because (a) I qualify for exemption as a writer; and (b) the whole matter became irrelevant because I moved away from Los Angeles County.

But the larger issue gnaws: Why should homebased businesses need permits and be required to pay taxes? Granted, there are good reasons to keep some kinds of business out of homes entirely-those that generate lots of traffic and don't suit a residential neighborhood-but that's handled under community's zoning regulations. Beyond that, when a city wants money from homebased businesses, it's simply a money grab.

What services do you or I use? In my case, none. Better still, because I'm homebased, I don't commute and thus inflict no wear and tear on the roads and I bring into the town "new" money. During some years when I was in Los Angeles, 100 percent of what I earned came to me from other areas. I didn't compete in the local job market and whenever I bought stuff in Los Angeles, the city reaped a sales tax bonanza. So I pumped money into the city-but got nothing in return.

Probably the same can be said about you wherever you live, and that brings us back to the central question: Why should we pay homebased business taxes? A city like Los Angeles, perennially teetering on the edge of insolvency, might want cash wherever it can hoover some up, but does it deserve it?

Worse, I think cities are looking for money from homebased businesses mainly because we're powerless. We aren't organized, we don't employ high-priced lobbyists, and we don't make large campaign contributions. We have no "friends" and we have no clout.

Unless of course you live where the WGA flexes its muscles and you happen to be a writer. In that case, powerful legislative friends will win you exemptions. But the fairness issue persists. Why should I get a free ride, whereas my friend, the car appraiser, has to pony up the bucks?

It's not right.

Or is it?

Robert McGarvey has covered the Web since 1995-just about forever in Internet years. He's the author of How to Dot.Com: A Step-by-Step Guide to E-Commerce. His columns appear in Entrepreneur magazine,,, and Porthole Magazine. Find out more by visiting his Web site,

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