Thread: Payroll taxes unfair to self-employed

Opinion

Payroll taxes unfair to self-employed

USA TODAY's editorial debate on Social Security presented two sides, cutting benefits vs. more taxes, yet both missed the mark (Sept. 21).

If the Social Security retirement age is to be raised, then it is also time to reduce the benefits of government workers who can retire after 20 years, while someone on Social Security generally has to work 35 years; who can draw on two retirement pensions, not one; and who often can have their health care benefits fully or partially paid for life after they retire.

Payroll taxes are the greatest destroyer of our middle class because the self-employed, a significant portion of the working population, pay 6.2% of their income up to $106,800 twice, at an effective rate of 12.4%.

The opposing view suggests removing the cap on wages subject to Social Security taxes ("Hike benefits, not age"). If that happens, then entrepreneurs who couldn't pay themselves a salary for two years during the Great Recession would have to pay 12.4% on all their income, when they finally make an income again.

Democrats and Republicans need to address the full set of pension and tax inequities that are destroying the middle class and entrepreneurism.

John Carlson; Andover, Mass.

http://www.usatoday.com/news/opinion/le ... _ST2_N.htm

On the surface it seems like self employed persons get shafted with SS tax. They are the employer and the employee so they have to pay both as the employer and as the employee. But on closer examination, it is not so unfair after all. The self employed person can take tax exemptions that the regular employee can not take. For instance, they can write off space for a home business. They can write off travel expenses and business dining expenses that the average worker can not do. They can write off a vehicle used for business. Can a regular employee write off the car or gas they use to get to work? No they cant. So in the long run it ends up being fair. What is not fair is having the eligibility age raised so they have to wait longer to get it. The income cap should be raised, not the age of eligibility.