Scrapps, everyone who has earned income pays Social Security and Medicare; they always have. In the case of an employee, the employee pays 6.2% for SS on income up to $62,700 (in 1996), and 1.45% Medicare on all earned income. The employer matches these amounts in the form of "Employment Tax", deposited directly to a Federal Reserve member bank, and reported on Form 941 quarterly.
Now a self-employed person has no employer to match the SS & Medicare amounts, so such individuals such as you and I pay the whole thing, and it is called Self-employment tax. The rates are exactly double what an employee would pay: 12.4% for Social Security (on earned income up to $62,700 for 1996) and 2.9% on all earned income, with no income ceiling.
So on profit of around 60K, a self-employed person pays (on earned income, which means the profit from whatever is your occupation) 15.3% (12.4% SS + 2.9% Medicare) plus your regular income tax on whatever your taxable income ends up to be. In 1996 the married bracket for 28% rate includes income over $40,100 and not over $96,900. Since income tax is progressive, the income up to $40,100 is taxed at 15% for married taxpayers in 1996.
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