Self-employment tax


Categories: Personal

Here’s the idea: If you get paid, some amount of your money is due in taxes. If you were self employed, you then pay additional taxes on that money. Why? I don’t know why. It’s presumably because self-employed people are bad for the economy, because a single guy working directly for his customers imposes so much extra overhead compared to what a good chain of middle-men can do… This is a plausible explanation for part of the tax code because it’s precisely backwards, and perfectly stupid.

The entire tax thing has been gradually getting worse. The percentage of your income which goes into taxes has gone gradually up for a very long time now. Two-income households? A lot of that has to do with the tendency for about a third of your money to go away before you ever see it. There’s a lot of pork barrel projects being run off of that money.

Starting on the taxes is always depressing. It’s bad enough having to work ludicrous hours to try to put food on the table; having four months out of the year go entirely into paying taxes makes it pretty hard.

It’s only about a third (well, 40%, maybe) of gross income, but a third of your income taken by taxes means that, whatever you got, half again that much went to the government. It’s sobering.

Comments [archived]

From: seebs_lawyer
Date: 2003-12-15 00:08:17 -0600

It’s the other half of Social Security tax (FICA). The half that’s hidden from wage earners because it’s assessed on employers. Wage earners still “pay” it, but they don’t see a direct deduction for it or have to write a check for it.

It’s only pork barrel when someone else benefits. When you get it, it’s a good program. Take, for example, the deduction of interest on a home mortgage. Will you be claiming that deduction? Do you like the flavor of that fresh, tasy pork?

Let’s leave the tax complaints for the trolls on Usenet where they belong.

From: Jesse
Date: 2003-12-15 03:31:18 -0600



From: linsee
Date: 2003-12-15 10:26:12 -0600

And how long do you think this would all last if people had to WRITE A CHECK for their taxes every week? Milton Friedman once said, if I remember correctly, that tax withholding was the worst idea he ever had.

–linsee (seebs’ mom)

From: seebs_lawyer
Date: 2003-12-15 20:57:08 -0600

This is totally NOT FAIR! Seebs and his MOM are ganging up on me! One surly post and they’re on me with the Uncle Miltie stuff.

But I do agree – if people had to write a separate check for their taxes every week, they’d squawk. But I don’t think the squawk would really be about the amount. It would be about the unfairness of doing it a week at a time. The events giving rise to major deductions don’t happen on a weekly schedule. People would end up writing checks for wildly varying amounts each week depending on the events of that week. Some weeks they might even get money back from the government. What a mess! Imagine the record keeping requirements. Imagine doing a 1040 every week.

Most people have neither the time, the intellect, nor the inclination to do this. Withholding works a hell of a lot better for a wage-earner. Remember all those dumb people you went to school with? They’re still out there and they have jobs.

From: Mike
Date: 2003-12-16 01:36:51 -0600

Well, up here in Canada, I have to say it’s pretty much the same schpeel. You just have to decide wether your services provided are worth the green; if not go self-employed ;-) If SO, try and capatalize on deductibles, city services, and goverment programs. ANd don’t feel guilty about tieing up the city phone lines with non-sequencial queries. Infact, do this once a day.