New York State Senator Martin Connor, who represents the 25th Senate District (DUMBO, South Brooklyn, Lower East Side), took a few minutes to respond to our questions about freelancer issues and shared some of his experiences as an independent worker:

Why do you think freelancers are important to NYC’s economy and culture?

Freelancers are the new economy that sustains our city. They work in areas of creative expression, cutting-edge technological applications, and independent intellectual property development. Freelancers are the progeny of New York City’s past generations of independent-minded strivers who made us the world’s leader in fashion design, theater, graphics, artistic innovation, and new business development. The synergistic economic benefits generated by these endeavors are important components of the City’s growth and prosperity. Culturally, New York City attracts people from all over the world because of the intellectual ferment driven by the mix of fearless, interesting, and independent people who inhabit our freelancer’s world. The freelancer spirit is our city’s signature characteristic that distinguishes New York from all other places in the United States that call themselves “cities.”

Freelancers don’t qualify for a whole host of social protections, from unemployment insurance to Department of Labor protections. How can New York State restore economic security to this workforce?

New York State must adjust its laws to the quality of the new economy and develop labor standards for freelance work. The old view, that freelancers are part of the “off the books” underground economy to be pursued, harassed, and discouraged by labor department and taxing authorities, must give way to the new economic reality and the actual facts of freelancing work. New York State must develop a new attitude that nurtures and protects the endeavors of “1099” work. I propose to introduce a bill that will officially recognize the work of freelancers and instruct the NYS Labor Department to develop standards to protect freelancers and their right to their earnings, free of any exploitation by those who use their labor.

The State must also develop a program to provide economic security for fallow periods in a freelancer’s work year. I strongly favor a system of unemployment insurance for freelancers and look forward to working with the Freelancer’s Union to draft legislation to do this.

How has your experience as an independent worker shaped your understanding of freelancer issues?

I have been a full-time State Senator for 30 years. My salary is currently $88,000 per year. We generally go 10 to 12 years between raises. In order to raise and educate my children, I have maintained a very part-time law practice from a small office in my apartment. In a busy year, I spend a total of 100 to 120 hours on this practice. Some recent years have involved only 25 hours spent at this practice. I have no employees.

This experience has brought home to me the problems of meeting recurring monthly costs with only intermittent income. Using this business activity for credit or insurance purposes is often problematic. Meeting estimated tax payments is a challenge when income varies so widely from year to year. Sometimes collecting fees due to me is near impossible since rules that bind any “firm” apply to me. Thus, a dilemma: does one make a large expenditure of time and effort to collect a small amount due? Believe me, I have encountered situations where the “non-payer” knows the score and is taking unfair advantage because he/she can.

Yes, I appreciate and understand freelancer issues.

Freelancers in New York City have to pay the Unincorporated Business Tax, even though the tax wasn’t created for us. How can New York State make the tax system more fair for freelancers?

I was serving in the Senate when the original Unincorporated Business Tax was passed into law. At that time, the legislature had a preponderance of practicing lawyers (now, lawyers are a small minority). The proposal for this new tax was highly scrutinized and widely discussed by the members.

At the time, law and accounting firms were generally organized as partnerships. As such, they were not subject to corporate business taxes. Many of these firms had hundreds of partners and employees. They were functionally the equivalents of incorporated businesses in the character and scope of their economic activities. This was the rationale for imposing the UBT.

In those days I prepared my own taxes. For a few years I carefully read the criteria for the UBT. To be subject to the UBT, a person with a professional practice or business endeavor had to employ other people or lease or own commercial business property. My little part-time, one-man practice in my own home was not covered.

Imagine my surprise a few years later when (having now resorted to using an accountant) I was told I had to file a UBT return, pay the tax, and start paying quarterly estimated UBT!

Somehow, buried in a budget bill, the law had been changed to ensnare me, and every freelancer in New York City.

It is simply unfair to apply the UBT to freelancers. It amounts to double taxation since we pay income tax on all of our earnings and are in no way comparable to the operations of a corporation. (I don’t even try to deduct for my home office since it has become too tricky under the tax law.)

I am committed to pushing for exclusion of “1099” workers from the UBT. The criteria for coverage should be returned to the original ones that limited imposition of the tax to businesses that are comparable to corporate entities.