The phrase "per diem" is derived from French and means "per day." It has two common uses. One is defined as base pay rate for temporary or contract workers. A common application of this definition is used in the nursing industry. When nurses work "per diem," they work for a daily rate, meaning they receive a certain number of dollars per day.
The second example is used to describe temporary payments to an employee to compensate for expenses that are directly related to required business travel or required business temporary relocation away from the employee's permanent residence. In order to receive tax-free per diem, the Internal Revenue Service requires the following:
1. The per diem payments must be directly related to required business travel or relocation from a person's permanent residence on a temporary basis. The term should normally not exceed one year.
2. The employee's new work location must be 50 miles from the employee's permanent residence. The employee must be required to relocate to the new location to perform the job function.
3. The employee must maintain a second residence at the new work location at the employee's expense.
Per diem is designed to compensate for housing expenses that an employee incurs to maintain a second residence.
Under no circumstances is an employee entitled to tax-free per diem while living at their permanent residence. Per diem is designed to compensate an employee for additional expenses they incur as a result of being required to maintain a temporary residence away from and in addition to their permanent residence.
Failure to meet these guidelines results in the per diem being fully taxable. In this case, the per diem payments are additional regular income. This is the situation that Alaska finds itself in with the governor and with the state legislators who reside in Juneau. These people are not entitled to tax-free per diem because they are living in their primary residences.
The ethical question is, should state employees receive per diem payments for living at home in their permanent residence?
The answer is absolutely not. In order to be fair, if any state employees are entitled to receive per diem while living at their permanent residence, then all state employees should receive the same payments. Hopefully it is obvious that this would be ridiculous. It is equally ridiculous that our governor, or the Juneau legislators, should receive such payments. No private employer would offer per diem payments in this situation.
Alaskans are actually paying Gov. Sarah Palin extra money to not be in Juneau, to not reside in the capital of Alaska. Palin prefers to stay home and collect per diem payments, rather than reside with honor and respect in the Governor's Mansion in Juneau.
If a loophole in state law allows these payments, it should be immediately closed by the Legislature in this current session. I make the following challenges to our state government and the people of Alaska:
1. That the Alaska Legislature immediately close this ridiculous loophole.
2. That Palin refund all per diem funds she received for staying home in Wasilla.
3. That the people of Alaska vote out those that fail to do 1 and 2.
I call on all Alaskans to join me in stopping this ridiculous, abusive and wasteful practice by contacting your legislators and asking them to stop per diem payments to people who are living in their primary residences.
The current financial crisis was caused largely by a failure of moral and ethical practices. Greedy people taking advantage of their positions of power. Let us join together as Alaskans and eliminate one unethical undeserved payment to those who are supposedly representing the people of Alaska.
Am I alone in being disgusted by this abusive, wasteful and unethical practice of paying state employees per diem to live at their permanent residences?