A Look From the Other End

A Look From the Other End

 

 "Don't touch social security!" It's a battle cry echoed by many on both the left and the right of the political spectrum. Understandably, no one wants to see their benefits reduced. Maybe it's time to look at the other end.

Not too far back, I met a young person (mid to late twenties), who was trying to make a go of a small business. This young entrepreneur was slowly building the business and clientele and had reached the point that he was able to take about $15,000 out of the business over the course of a year. Not much to live on, that's for sure. Of course, he didn't owe much income tax, but self-employment tax amounted to more than $2,000.

Things are not much different for a young person trying to start a family on a beginner's wage. The employment taxes on the first dollar an employee earns are over 15 percent (ignoring the temporary 2 percent holiday). By splitting the payment of the tax between the employer and the employee, however, it doesn't appear to be as onerous as the self-employment tax. But it is....

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View David Windish's complete opinion in its entirety on TAX.com.

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