Why is there a self employment tax.?

Question

Is our government focused on big business?

Answer 1

To ensure that everyone is covered by the safety net.

Answer 2

Self employment is Social Security tax.  You pay what you would pay if you were an employee and what the employer would pay if you worked for someone else.  You get credit for half of it on the first page of your tax return.

Answer 3

On your wage income half of the self employment tax is paid by employer while other half is paid by employee.

In case of self employed, you are both an employer and an employee.

Read about self employed tax filing http://taxipay.blogspot.com/2008/04/tax-...

Answer 4

No, has nothing to do with big business.

Self employment tax is for social security and medicare.  If you work as an employee, it's deducted from your paycheck and a matching amount is paid by your employer.  If you work for yourself, you ARE your employer so you pay both halves.  

Answer 5

The self-employment tax is the self employed version of the social security/medicare tax, aka FICA.

If you do the math, self employment tax works out to be exactly equivalent to the FICA tax a person earning the same amount of money as a W-2 wage earner would pay with the employer's portion (you act as both employee and employer).

Why there is a FICA tax, you'd have to go back to its roots in the great depression of the 1930s.

Answer 6

The term "self-employment tax" refers to the payroll taxes you and your employer would be paying if you were employed.  

An employee pays Social Security and Medicare Tax.  The employer matches this tax as well.

A self-employed person pays both the employee and employer share of Social Security and Medicare Tax.