Chris Blattman

I became a little more Republican this week

We are hiring a nanny and, as far as I can tell, we’re among the 2% of families who try to do it on the books.

I would lose no sleep hiring an illegal immigrant. The immigration and work policies in this country are shameful. But I think the taxes and employment laws should be followed, illegal or legal worker.

This is partly on principle, and partly because, assuming my blog musings don’t bar me from public service forever, I’d like to have the option to work in US government one day. Nothing elected (the thought makes me throw up a little in my mouth) but possibly something in foreign policy or development one day. So it means I need to hire someone legal and do it legally.

Now, paying on the books would be easier if it were an actual equilibrium. But with no one else doing so in New York, it’s ridiculously hard to find a nanny who will even consider the legal route. But that’s not my main complaint.

For me to persuade someone to go on the books, I basically have to pay both their taxes and the employer contributions, so that they get the same take-home pay. This amounts to a 25-30% premium. But this still isn’t my main complaint. The premium hurts, and I have mixed opinions on taxing employment, but it’s not the level of taxes that frustrates me.

As far as I can tell, I need to submit taxes or withholding to at least seven different agencies at different levels of government. What if I miss one? A friend (and a blogger some of you may know) missed a minor payment to one of the seven, by accident, and got slapped with a $10,000 fine. The government should have added a little note to the bill: “Thanks again for being among the 2% who actually try to pay taxes.”

It’s sufficiently complex, and I’m sufficiently bad at accounting, that it actually makes econmic sense for me to pay hundreds of dollars a year to a firm to manage this mess. Madness.

Anyhow, unemployment rates make a little more sense to me today. Now if you’ll excuse me, I have eighteen forms to fill out over my lunch…

16 Responses

  1. In a time of almost 10% unemployment the government should not be throwing up road blocks to hiring someone. In DC it is just as bad. You are required to buy workers comp insurance and it is almost impossible to find a company that will provide it (unless your homeowners insurance company does, which mine doesn’t).

  2. Maybe it’s the effect of an intelligently disguised family policy that tries to convince you (or rather your wife) to stop working for a few years and stay at home with the baby.

  3. What are you complaining about? A more useful statistic than the 2% figure would be percentage of households that can actually afford to hire a nanny. I did not know you could afford a nanny trying to “help” the poor in Africa. What world do you live in?

  4. Except that Republicans don’t care any more than Democrats about simplifying the tax system. The complexities of the tax system overall work to the advantage of the wealthy who routinely hire accountants to manage their taxes anyhow. It is the middle class who really gets no benefit. And Republicans just rejected an Obama plan to cut the payroll tax (which Reagan nearly doubled), so they like the regressive taxes you are dealing with just fine.

  5. Interestingly, the German government instituted special provisions to make it super easy to legally hire household help (up to 400 Euros/month) – including of course Nannies – it’s literally one form and one agency – so ease of doing business may vary by what you try to do. I talked to the agencies director and they’re not having a huge amount of success getting people to pay (which I assume is also a supply issue – my sister tried and had a really hard time and ended up just hiring someone through a company).

    1. French system is also super-easy : only one declaring organism, and also heavily subsidized.

      Now, the showers might not be very good, but…

    1. It’s pretty easy to hire a nanny legally in Brazil. It costs less than 10% more than hiring a nanny ilegally (it’s going to increase a little bit as the government is pushing for nannies to have similar benefits than other employees) and as far as I know you just have to fill one form. Brazil is full of red tape.Much more than in USA. But not in this case. Anyway I believe this example tells a lot about the awful quality of these “Doing Business Indexes” commonly reported in the media.

  6. Just go with the hispanic baby sitter.
    Immgration laws are extremely contradictory in this country, and they end up inflating the wage. An open market economy (which the republicans advocate so strongly, not that I completely agree with them) implies free movement of the factors of production, which includes labor.
    A plus is that for the same amount of money you also get cultural and language education for your child :)

  7. Here in DC, where there are many families with legal nannies (for obvious reasons), everyone who does so seems to hire a ‘nanny paperwork company’ to take care of the tax forms and payments. A bit like using Turbotax to figure out our taxes.

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