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View Diary: Abbreviated Pundit Round-up: The nihilists surrender (178 comments)

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  •  And in the year that he earns $50K (1+ / 0-)
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    Laconic Lib

    he pays less.  And so does his business.  

    FICA tax is on personal income, not the business profit; there's no reason that his business can't kick in the 7.6%, and his income is taxed at 7.6% for FICA.

    If he has a good accountant he writes off a lot of expenses on his business and he does just fine, provided he continues to do quality work and keeps his clients happy.  

    •  Self-employed people pay (0+ / 0-)

      both halves, period.

      FICA is a horribly regressive tax, and MUCH MORE so on people running a sole proprietorship or a small business.

      If you move FICA up to 200k, that person, on a 200k year, will be paying more than $30,000 to FICA alone. He'll pay another $40,000 or so to the Federal government and another 5-10% to the state, depending on location.

      And not every small business has deductions that amount to a hill of beans, particularly a service or software type business. Many programmers, for example, are now 1099 contractors (self-employed). They get to write off a couple of proprietary middleware licenses (peanuts) and can take a tiny home office deduction perhaps. Likely their biggest deduction would be miles driven on the days they go on site.

      A software engineer or a writer having a good year and making 200k might write off 5-15k, tops. In fields like this, the next year might bring in close to nothing.

      This is a horribly burdensome tax already on the self-employed - and doubly disgusting when you consider the investor class was paying ONLY 15% (less than the FICA tax alone for self-employed) on the millions rolling in.

      Now that's up to 23.8% for high incomes, thanks to the roll-back of some Bush tax cuts and the closing of the Obamacare loophole on the Medicare tax for investment income (which is why the very wealthy really HATE Obamacare, by the way).

      Many posts here reveal a profound ignorance about how small businesses run and the mountain of hurdles they face above and beyond the rest of the country.

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