Friday, February 23, 2007
Self Employment Tax
In general I have little patience for "the gummint should get its mits off my money" crowd (I think I might side with that Jewish carpenter feller some in that crowd claim to worship about who's picture is on the money and whence it should thus be rendered), but this galls me: how's someone making about $25K a year supposed to pay about $3K in "self-employment tax". At least if your making $25K a year as an employee, you have your payroll tax paid by someone else.
The pay-roll taxes are regressive enough. But the gummint sticks them to people directly if they are "self-employed": WTF?
The pay-roll taxes are regressive enough. But the gummint sticks them to people directly if they are "self-employed": WTF?
# posted by alberich @ 1:51 PM 
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You would think that with all of the taxes we pay (sales, property, income, dividend, etc.) Uncle Sam would cut the self employed a break. Everyone has to pay income tax anyway if their Adjusted Gross Income is above the standard deduction. It looks like the government is trying to double dip on the self-employed.
Juan Rodriguez
Editor, JustJobs.com
Juan Rodriguez
Editor, JustJobs.com
Dave, should the extra work of self-remittance of taxes make a self-employed 25K person not pay taxes like a 25K employed person?
It depends on what you mean by "25K person". When you are self-employed you evidently have to pay all of your payroll taxes. If you are employed by someone else, they pay for half of your payroll taxes. So if you are earning (even before your own FICA taxes, which are automatically with-held) $25K from a job wherein your are paid by an employer, you are effectively making more (by the amount your employer is paying into payroll taxes) than if you are making $25K self employed.
This is one way employers "save" money by hiring people as independent contractors: they hire some feller for the same wage, but that person's effective income is lower as that person will end up having to pay 100% of the payroll tax rather than 50%.
Of course, the payroll tax is regressive anyway ...
This is one way employers "save" money by hiring people as independent contractors: they hire some feller for the same wage, but that person's effective income is lower as that person will end up having to pay 100% of the payroll tax rather than 50%.
Of course, the payroll tax is regressive anyway ...
good point! I also think they should raise the bar for payroll taxes(I think you pay on about 90K of income, I raise it to like 120K) to raise revenue
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