Entries Tagged 'Self-employment' ↓
March 25th, 2013 — Government, Self-employment
If you’ve been reading my posts about the self-employed on Huffington Post, you may wonder why you should care about tax reform for the self-employed. Why care if self-employed make less money than employed yet pay higher tax rates? So what if lower-income self-employed get taxed twice on the higher amount they have to pay for SE (Social Security/Medicare) tax?
How many self-employed people are there in America anyway?
The US Census Department, 2009 Current Population Survey counted more than fifteen million. That’s well over ten percent of the US workforce, and it’s one-third greater than the current 7.7 unemployment rate that has everyone so worried. Fifteen million is three times the total membership of the powerful lobbying group, the NRA (National Rifle Association).
So, why isn’t the government concerned about self-employed Americans? And why should you care?
Because self-employment is the foundation for small businesses, and right now small businesses, not large corporations, are the chief driver of innovation and new job creation in the US economy. Continue reading →
March 18th, 2013 — Self-employment
Self-employed business owners desperately need tax reform. But no meaningful tax reform for self-employed will take place until the IRS dumps its Chimera of self-employed being “two persons in one”. The IRS taxes self-employed as if they are both an “employer and an employee”, i.e., as if they are two persons in one body.
That’s ridiculous! The self-employed person is neither an employer nor an employee. He or she is a unique hybrid – a self-employed worker without a boss.
Worse yet, the IRS uses its two-person-in-one myth for its own benefit while self-employed people get the shaft. Let’s look at two examples: Continue reading →
March 8th, 2013 — Self-employment
Self-employed pay the highest income tax rate of any group in the US economy. In 2013 self-employed workers will owe a total tax rate of 25.3 to 43.3 percent on earned income between $400 and $110,000. What is the reason for this?
Employees pay only 7.515 percent for Social Security and Medicare taxes, while self-employed workers pay double that amount, 15.4 percent.
Why is that? The IRS considers self-employed workers to be “two persons in one,” an employee and an employer. Thus, the self-employed individual must pay the IRS both the employee and the employer halves of Social Security/Medicare tax. Self-employed workers pay twice as much as either an employee or an employer pays for FICA taxes.
The pressure a 15.4 percent flat tax puts on self-employed pushes many self-employed into the IRS deductions trap.
Martha’s story Continue reading →