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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: GraceZ who wrote (161504)11/1/2008 8:30:01 PM
From: neolibRead Replies (1) of 306849
 
Gad, you are all over the map. Your claims were about effective FICA rates. You have never admitted you were 100% INCORRECT in your claims that FICA rates are different based on INCOME tax brackets. They are not (well, other than going over the FICA cap of coarse).


I did make one mistake, in that to compare the employed person to the self-employed you have to use the gross amount of 95,000 and then add the employer half of FICA payment to factor the FICA effective tax and then back out the tax savings of the employer half not being subject to Federal income tax.

LOL, you are still clueless. No you don't add in the employers 1/2 of FICA to compute an employed persons effective tax. For the last time, 1/2 of FICA is tax free for both employed and self-employed and it is tax free for both FICA taxes and income taxes. That is what the SE does and what line 27 of the 1040 does. They back out 1/2 of self-employed FICA from self-employed income, so that self-employed income is treated on an equal FICA and income tax basis as employed income. This is childs play.


The wonderful thing about this exercise is that it shows that FICA as well as SE tax has an effective rate on wages of around 12.2%, at least on most wage incomes (those that don't rise above the limit).

Bullshit.

It is .153 x 0.9235 = 14.13% ALL THE FREAKING TIME UP TO THE CAP OF TOTAL SELF-EMPLOYED WAGES OR 15.3% OF "EQUIVALENT" WAGES.

PS: What the heck is FICA as well as SE tax? SE is a schedule used to compute FICA tax.

This all makes me wonder if you are equally confused on other subjects of finance. On this particularly simple one, I can easily see your mistakes, but on areas I'm less confident in, I might well think you know what you are talking about. I'll need to keep this exercise in mind I guess.
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