He had been hinting at me for weeks that he wanted me to go perm, but I never took him seriously because I had signed an agency contract with a no-compete clause. In fact, the DBA I had replaced had been rehired at the beginning of August--and then resigned again (in less than 2 weeks) when an even earlier employer offered him stock options, which were very hot in 1999. That DBA, angry at my boss for keeping me as lead on the ERP production database, started spreading rumors that I had been offered a job by my boss--totally untrue (but ironically my boss believed it and was angry at me because the rumor had apparently undermined his intent to make an offer). The fact is my original assignment had been due to expire at the end of July, but an Indian colleague was going to India for the month of August, and my boss used that as a pretext to keep me on.
I expected for him to try once again to hint at going perm and tried to evade the topic, but my boss had a different plan, which caught me off-guard: He told me the company wanted to make me an offer. If I did not accept then and there, this would be my last billable day, and they would look to bring me back if and when they upgraded their version of Oracle Apps (not anytime soon).
When I went to the explicit discussion of the no-compete clause, it turned out he was prepared for it. It turned out my agency had made some unbelievable blunders. The sales guy on the account misrepresented the terms of the contract to his management, won a high bonus and then resigned. The agency was slow to replace him. The agency didn't get the contract signed, and to make things even worse, had invoiced them, instead of exploitively double my rate as they intended, at below the rate they were paying me. My boss could simply pay the amount they invoiced him, and the agency would be in the hole. (I of course received subsequent virulent emails from company officers, and "Benedict Arnold" was probably the tamest thing I can post here; they used abusive language, vowed to sue me, and denigrated my professionalism and personal character. The fact is that I never initiated or encouraged any discussion of a permanent offer.) I was given an ultimatum, and if I turned it down, I was unemployed.
To this day, I have to smile at the cheesiest sales pitch I've ever heard from my client boss: He literally used the fact I could buy a can of Coke for a quarter in the company vending machines. (I mean, other IT employers didn't even charge for soft drinks, and a later client once invited me to their weekly Friday beer bust.)
Not to mention the experience I had a few weeks earlier where my boss invited me to go downstairs for some leftover pizza after a company meeting/luncheon. I was initially reluctant, pointing out I wasn't an employee, but my boss insisted. I went downstairs, and a female Filipino accounting manager, who resented me for replacing the former DBA, saw me approach the unattended open boxes and sprang into motion, closing the boxes and standing in front of me, screeching that the pizzas were for employees only, not me. This, I think, is one of the most pathetic things I have ever experienced at a customer site. The fact of the matter is, my boss probably figured he was saving the company money by letting me have some cold leftover pizza rather than my going out and expensing a lunch.
In any event, I reluctantly agreed under my boss's extortion to accept, which required my moving to California. I would then live in California over the next 20 months or so until returning to Illinois to work on a project in the Milwaukee suburbs.
I was not thrilled (although hardly surprised) when my state income tax nearly tripled and my living expenses went up roughly 40%. To those who have never lived in Silicon Valley, there is a perverse attitude that defies any attempt to describe it. I'll try with one minor example. I rarely go to the movies, but I think Silicon Valley was one of the first places to see movie theater prices go up over $10 a ticket. When asked to justify it, some theater owner effectively said if you could buy a home starting at half a million dollars, you are disgracing yourself by even raising the question.
But my unhappiness with the California government is based primarily on two facts, which offend me even more than the sky-high taxation. Both of them, in my view, are ethically unconscionable. I had no choice, because I was living in Illinois, and I couldn't find a California lawyer interested in pursuing the issues because it wasn't worth their while.
In 1998, the Congress allowed taxpayers a special deal to convert an existing IRA to be converted into a Roth IRA (which requires recognizing the amount of the IRA as income at the time of the conversion). Under the special terms, you could split the amount of the conversion in 25% splits for 4 years, starting in 1998. (What makes the story even worse is my broker at the time, Fidelity Investments, refused my mid-December plea to reset my then underwater conversion because they didn't have enough staff (I could do it the following month, but I would have to declare all the income in 1999)).
Most states, including Illinois, did not tax the proceeds. Before going further I want to point out that at the time of the conversion not one dime of that income was earned in California, I had no desire or intention of moving to California, if I knew I would ever be state-taxed on the conversion, I would have reconsidered the conversion decision because the additional taxes would have lowered my returns.
The California tax revenue people docked me for subsequent Roth IRA splits declared during the time of my residency in California. California docking me nearly 10% for a transaction that did not occur in California and did not involve income earned in California is chutzpah.
The state income tax people were absolutely shameless and unyielding to any discussion of reason. They claim that some moronic (my word) California judge had decided BECAUSE CALIFORNIA DID NOT GET A CUT OF ROTH SPLITS ORIGINATING IN CALIFORNIA WHEN TAXPAYERS LEFT THE STATE, CALIFORNIA HAS THE RIGHT TO TAX THE SPLITS OF OTHER STATE RESIDENTS MOVING TO CALIFORNIA. Say what? Anyone making a conversion in California KNEW they were on the hook to pay the greedy bureaucrats nearly 10% for all splits. So they move to Illinois, and surprise, surprise, they find themselves in a tax windfall. Only in California can you find a judge stupid enough to think it's fair to tax me when I had no knowledge at the time of the conversion I would be living in California over part of the next 4 years.
The second example involves the SDI deduction (a mandatory California tax, at the time I believe which maxed out at somewhere around $250). I left the Japanese subsidiary in July of 2000. By that time I had already paid the maximum for SDI. I joined a consulting company which laid me off in early December 2000 (and I did some subsequent subcontracting work before and after on a W-2 basis). Each employer assumed I had paid no SDI. So I ended up paying about double my maximum.
To my utter astonishment, the sleazy California tax people decided to disallow my credit owed for excess SDI. (This was after I moved to Illinois in 2001 and to this day I haven't found my personal W-2 stubs.) I had itemized the exact amounts in my tax spreadsheet, but my former consulting company employer was no longer in business and I couldn't get a copy. That shouldn't have made a difference, but somehow California "lost" the state copies of my W-2's and thus decided it was only fair to disallow my excess SDI deduction and put the burden of me to "prove" that I had overpaid SDI by furnishing my personal W-2 copies, which were/are probably stored in some unpacked moving boxes.
I argued that they should be able to determine that from my employers that year. They claimed they couldn't do that because employers only submit lump sums with no breakouts of individual employees. It was just mind-boggling how they "lost" my state W-2's, weren't disputing my declared income--but were disputing the excess SDI, which is obvious to anyone with rudimentary skills in arithmetic.
I had no choice but to pay under extortion from the State of California for two circumstances where the facts are indisputably in my favor.
The response is that I will never let the State of California get a chance to steal my money again or to tax 10% or more of my income. As I heard Governor Arnold Schwarzenegger moan over the state $42B shortfall and shamelessly pander to the Obama regime for his fair share of our children and grandchildren's income, I felt, cry me a river. The State of California can kiss my blue-eyed Canuck ass.
