Quote:
Originally Posted by Leentron3030
What's not fair? This is why Sole Proprietorships are called pass through taxation. You get to have all your income taxed at a lower % than if you were working for a corporation, deduct expenses, you even get to write off losses, etc. You have it good. SSI and Medicare are costs to the employer, correct. Costs that can be adjusted to ARRIVE at your AGI which reduces the amount of your income that may be taxed. That's a small price to pay for all the benefits of a sole proprietorship.
Maybe I am missing your point. What is the logic behind you saying this is the equivalent of making employees of a corporation do all that? You are running your own business, employees of a corporation are merely contributing members to a business. Employees of a corporation don't see profit and capital gains, you do. Employees of a corporation don't own the building or the computers they are doing work on, you do. Whoever owns the equipment amortizes the depreciation. Whoever is getting capital gains is also experiencing the expenses related to it. Employees of a corporation are getting paid to go into work, perform some duties, and then bounce. We're performing a service, not being a functioning sole proprietorship within a corporation.
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You’re saying that I shouldn’t complain about taxes or the amount of SSI/MC because I get other benefits/deductions. I’m saying that it is not fair to say that because of several factors.
Revenue – Expenses = Profit. The profit is what I take home as a SP, and is largely AGI at the end of the 1040 because I run my expenses through the company to get a higher % of deductibility. The expenses in a company vs a SP are virtually identical as far as what is allowable/deductible, and can be discretionary to a certain extent. For an employee of a company, their paycheck is Revenue and then they start with exclusions and deductions. I’m not automatically more wealthy as a SP because I can fully expense my medical insurance costs instead of having it limited to the payments in excess of 10% of AGI like normal employees. That’s still an out of pocket expense for me. Also, there are no matching 401k payments, no employer side SSI/MC paid for me, no paid vacations, no sick leave, no employer paid unemployment insurance or liability insurance. The benefits of being a SP also carry a huge risk and responsibility.
The “add it up” comment was in reference to this assumption. If I’m going to be automatically assumed to be better off as a SP because I can tweak expenses in my favor, then I want to automatically calculate the cost of having an employee at a company, and then add it to everyone’s paycheck so that I can let them know how much more they are getting on top of the take home pay. Should they then feel better about their situation just because it’s pointed out to them? Or is the reality of who is better off determined more by how that person personally manages themselves? In other words, I’m probably better off because of how I treat the system, not because of how the system treats me.