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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: GraceZ who wrote (160513)10/27/2008 2:17:32 PM
From: neolibRead Replies (1) of 306849
 
Thanks for finding that, it provided the needed info. From their table, the bottom 50% would be a bit higher than I computed before, 21.85% if you just split the middle, or perhaps a percent or so lower if you adjust for the fact the bin has width. So somewhere around 20% of FICA taxes is paid by the bottom 50% of households. Which leads me to suspect that the bottom 50% of wage earners most likely pay significantly more than 20% of FICA taxes. One interesting thing to note is that they massage income by family size (divide by square root of size) and that the quintiles are actually NOT quintiles of families but quintiles of individuals.

Oh well, the devils in the details..., speaking of which: 1/2 of FICA is not deductible. The steps in the SE and line 27 of 1040 are simply making self-employed income be calculated the same way that employed income is calculated for ALL taxes (FICA & Income). Just that, nothing more. What is so difficult about that? If you want to persist in claiming that 1/2 is deductible you should then also claim that employed individuals earn 7% MORE than their W2 claims they earn, AND that that extra money is not subject to ANY tax, AND the FICA tax rate is actually 15.3% AND the extra 7% all vanishes due to the higher FICA tax rate, BUT none of that 7% was itself subject to any taxation. That would be a valid way of looking at things. It would show explicitly that income was calculated the same way for both employed and self-employed, and that the FICA tax rate is also identical. The fact that these calculations are spread across multiple tax forms as well as nonsense in payroll reporting is no excuse for befuddling yourself over it.

whereas those with employers are largely unaware of this deductibility because they don't make the payment nor take the deduction, it is indirectly passed to them from their employer.

It is not deductible because "they" pay half the rate, and the the other half is not counted as income. See the above.
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