Taxing Nannies

66 Pages Posted: 29 Jan 2024 Last revised: 4 Feb 2024

See all articles by Ariel Jurow Kleiman

Ariel Jurow Kleiman

Loyola Law School Los Angeles

Shayak Sarkar

University of California, Davis - School of Law

Emily A. Satterthwaite

Georgetown University Law Center

Date Written: January 26, 2024

Abstract

Nannies in the U.S. work long hours for low wages and risk retaliation if they complain. Informal, or “off the books,” work exacerbates their precarity, keeping it secret from state and federal tax agencies, as well as employment and labor agencies. Yet we have little understanding of how nannies navigate the tax reporting that renders them formal or informal.

This Article investigates nannies’ preferences for or against formal employment and tax reporting, the reasons behind such preferences, and how such preferences inform nannies’ relationships with their employers and legal institutions more broadly. The Article employs a multi-method research approach that includes an original and innovative survey of nannies and an analysis of nannies’ tax-related posts on the online forum Reddit. To supplement this research, the Article also discusses interviews with fifteen subject-matter experts regarding industry norms, common challenges nannies face, and policy reforms.

This multi-method approach reveals four key takeaways. First, surveyed nannies express a strong preference for and experience with formal employment. Second, however, a subset of nannies—often undocumented and working more informally—is missing from surveys and the literature. Extrapolating survey results to these most vulnerable populations may be unwise, but our expert interviews fill in these gaps. Third, the formal/informal dichotomy so prominent in the discourse is inaccurate. Rather, nanny pay arrangements exist across a spectrum, with some compensation both on and off the books to accommodate hirers’ and nannies’ complicated interests. As a consequence, the Article’s fourth takeaway is that simple calls for increased enforcement may not accomplish intended goals, given the heterogeneity of nannies’ tax lives. Instead, other legal institutions must first be reformed to better support vulnerable nannies and align incentives for formality across key systems such as tax, immigration, and public benefits.

Keywords: tax, social security, public benefits, domestic work, nannies, childcare, caregiving, labor, work, employment, workers rights, informal work, informal sector, tax evasion, tax avoidance

JEL Classification: H2, H22, H24, H26, H31, H5, H53, H55, J30, J33, J38, J46, J83, K00, K31, K34,

Suggested Citation

Jurow Kleiman, Ariel and Sarkar, Shayak and Satterthwaite, Emily A., Taxing Nannies (January 26, 2024). Loyola Law School, Los Angeles Legal Studies Research Paper No. 2024-03, Available at SSRN: https://ssrn.com/abstract=4707816 or http://dx.doi.org/10.2139/ssrn.4707816

Ariel Jurow Kleiman (Contact Author)

Loyola Law School Los Angeles ( email )

919 Albany Street
Los Angeles, CA 90015-1211
United States

Shayak Sarkar

University of California, Davis - School of Law ( email )

Martin Luther King, Jr. Hall
Davis, CA CA 95616-5201
United States

Emily A. Satterthwaite

Georgetown University Law Center ( email )

600 New Jersey Avenue NW
Washington, 20001

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