From: utzoo!decvax!harpo!floyd!vax135!cornell!tesla!kinch
Newsgroups: net.misc
Title: Re: A way to get out of SocSec?!
Article-I.D.: tesla.5
Posted: Sat Feb  5 12:43:49 1983
Received: Sun Feb  6 05:29:53 1983
References: houti.205

Self-employed persons must pay what is called the "self-employment tax"
on their earnings (that is, what their business grossed less deductible
expenses less capital reinvested), which replaces the FICA (SocSec) tax
that ordinary employees pay.

In one sense the tax is higher, since you pay a greater rate on your
earnings (salary paid yourself), namely 9.3% in 1982, than regular
employees, namely about 6% (?) in 1982.  The same kind of ceilings
for taxable income apply as with FICA taxes, however.

In another sense, the tax is lower, since with FICA taxes the employer
must also "contribute" an amount equal to the employee, which makes
the effective tax about 12%, versus the 9.3% for self-employed persons.
Whether you the employee or your employee really are paying this tax,
or whether you split it between yourselves, is a matter of debate in
economic theories, from what I've read.

Richard Kinch vax135!cornell!tesla!kinch