Let me start by saying something that is going to be wildly unpopular with masses of people here. I wish like hell that somebody would tax your fucking health care benefits. Seriously. I am self-employed, as are a number of folks on this site, and listening to people bitching about how folks in a 36% tax bracket might have part of their cafeteria plan capped is enough to make me physically ill.
I made a middle-class income last year. For much of the country, what I made would leave me dumpster-diving for two of three meals a day. But in South Carolina, as a single guy, I do fine and I'm mostly happy. But let me tell you what life is like for someone who is single and self-employed. First of all, many of you have families. For reasons that are absolutely beyond my understanding, the federal government, and your state governments, have decided that you being married treats you to a "head-of-household" deduction. You get a "married" box to check. If you have children, the government seems to think that I, as a single guy, should be compelled to subsidize your children by letting you check them off as deductions. Why are your children a goddamned tax break for you? I have no idea. If you own a home, you get a mortgage deduction. I don't get a mortgage deduction. I gave the government most of a house downpayment as my tax burden last year. Second, if I did own a house, I would own a house that a single person would want to live in, rather than one that comes with 4 bedrooms, so chances are my monthly mortgage payment wouldn't carry enough interest to overcome my standard deduction.
Now, let's explore one other item here before we get to your subsidized cafeteria plan. You have a husband or wife, and you've got two incomes coming in. Congratulations! If the two of you have combined incomes of somewhere above 90k, it means that you pay no social-security on any dollars above that amount, because once again, the federal government said, "Hey, what's another way that we can fuck middle-income single people? I know! We'll make sure that self-employed people get regressively taxed two different ways. First, we'll tax every dollar of income that they make, and because they're self-employed, we'll make them pay both ends of the tax," meaning that those of you who are bitching about caps on cafeteria plans might wish to consider that I paid a 15% tax on EVERY FUCKING DOLLAR THAT I MADE last year. Oh, I know what you're thinking. "But there's a standard deduction in there that offsets part of that." No there isn't. FICA gets dropped on every dollar I make, before anybody in the government starts to worry about how many deductions I've checked off. And that's for starters.
The other thing that I got to do was to pay around 2500 bucks into a really bad health-insurance system. Now, you are probably thinking, "Oh, well, that's all right. I'm sure the government in its wisdom figured out that Steve, and people like him, should be able to claim their health-insurance premiums as some kind of exemption. I mean, if the government just gave it to him as a deduction, that would be cruel, but I'm sure that they have it designed so that Steve, and people like him, get to take those self-employed health-insurance dollars and reduce their tax burden dollar-for-dollar." And you would of course be completely fucking wrong. The government does not give me an exemption for health-insurance. They give YOU an exemption for your health-insurance dollars. You were going to buy health-insurance anyway, but your company decided to make you part of a cafeteria plan, which means that you, unlike me and others like me, get to have the dollars that you were going to use to buy health insurance anyway go into that pot absolutely tax-free. You get a middle-class tax shelter to go along with all of your other middle-class tax shelters.
What, ultimately, does this mean? What, ultimately, it means, is that I, and others, are subsidizing your tax breaks. The money that you aren't paying into the system is money that I'm having to pay into the system for you. You don't like the idea that your 15,000 dollar a year health-insurance premium may not come to you for free anymore? Well, nothing personal, but ....
(This picture brought to you in my continuing effort to raise discourse above the level of a "**k you" rant. Please view the wholesome picture and feel warm and fuzzy before engaging in the discussion below).
I would have loved to have my health-insurance dollars keep me from having to write Uncle Sam one of the 2500 dollar checks that I wrote him last year, but for me, they don't.
Update: There's some really interesting discussion below dealing with the social security issue for married couples who are both wage-earners. I won't try to go through and edit the above simply because it would take forever to tinker with it, but I'm learning some interesting tax law here!