⏩ The pandemic is causing massive tax law headaches
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This week: Taxes are going to be very complicated this year, and tech startups are hitting the jackpot. Plus: young lawyers still favor Big Law over new opportunities.
💰If you’ve been WFH this year, you could face double the taxes
Nine months of working from home for millions of Americans has U.S. lawmakers asking an important question that could affect remote workers everywhere: Who gets the tax dollars?
States used to have a simple recipe for taxation: They would tax people based on where they lived or worked. A New Hampshire resident who traveled everyday into Massachusetts for a job could be taxed by Massachusetts. But many people who used to cross state lines have been working from home for most of 2020.
This could lead to many complicated results: Some newly remote workers may be taxed twice. Some workers who are now working in lower-tax states may petition their company to redo their tax forms. And some companies may have to pay business taxes in more states than usual.
Congress is working on a solution
Many Democratic and Republican lawmakers have advocated for taxing people the way they were before the pandemic, regardless of where they moved or where they worked remotely.
New York may be the biggest obstacle. Some 15% of its annual tax revenues come from nonresidents. The state will likely not want to see the federal government creating a precedent of telling states who they can tax.
Remote work has thrown many tax laws into disarray for years. Changes made in 2020 could be a preview of greater reform in the future.
💥 For startups, 2020 feels like the dot-com boom
While everyone rushes to adopt new technology during the pandemic, the biggest movers and shakers in the startup world are partying (alone but together) like it’s 1999.
In March, it seemed many startups would be doomed: There was talk of pivots, thousands of layoffs and restructuring. The bad times didn’t last long. Demand for digital products started to rise as companies made technological leaps that would have normally taken years. At the same time, interest rates dropped, leading VCs to seek more action than usual.
The funding numbers are bananas: Third quarter investments for startups totaled $36.5 billion, according to CB Insights data from The New York Times. That’s 30% higher than last year. PitchBook reports there have been 223 rounds of mega funding ($100 million or more) in 2020. “I haven’t seen anything like this in over 20 years,” Eric Paley, an investor at the venture firm Founder Collective, told the NYT. “The party is as loud and the drinks are flowing as freely as the dot-com boom, despite that we’re all drinking at home and alone.”
The investment time period has even shortened
Typically, successful startups get funding every 18 months. High competition among VCs has reduced the period to 3 to 6 months. One investor said he has heard a pitch, researched the startup and sent it money for an investment in a single day.
The good times are not expected to end in 2020. If anything, analysts say, the year has illustrated that tech’s powerful grip will tighten.
🚌 With more options, young lawyers still choose Big Law
From diversity issues to burnout to pandemic economic cuts, big law firms have been placed under more scrutiny than ever. But none of the complications are steering top young law school graduates away.
The destinations for new graduates look the same as in years past: As Northwestern Law professor Daniel Linna told Law.com, firms remain the “bread and butter” for top students.
It’s not from a lack of other opportunities: More law students are learning data analytics, AI tools and other skills than ever. And more companies and consulting firms, who used to hire more experienced attorneys, are wanting young lawyers as they reckon with lower budgets for 2021.
But the salary doesn’t always match: “I see plenty of these jobs outside of law firms [that] pay more and more,” Linna said to Law.com. “But at least based on what I’ve seen, for the majority of these jobs, it’s [still] not quite comparable to what a majority of our students at Northwestern would be paid going into a big law firm.”
The big picture
Although many lawyers quickly tire of big firm life, they want mobility. Jared Coseglia, founder of TRU Staffing Partners, noted that traditional law firm experience can still keep nontraditional paths open in the future.
Certainly the bonuses don’t hurt, either. Even in 2020 associates are getting big payouts at the end of the year.
What else we’re forwarding
Lawyers want Rudy Giuliani and other Trump lawyers disbarred: Maybe frivolous court claims from Trump’s team actually will have a consequence. Some 1,500 attorneys have circulated petitions to bar associations asking for Giuliani and other attorneys to be disbarred.
Facebook gets hit with a class action lawsuit over user data: Another week, another accusation of anticompetitive behavior against Big Tech. Unlike Google, this action against Facebook comes from private parties.
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