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Friday, February 01, 2008

I Just May Vote for Obama

In the past few weeks I have identified with the unwashed masses. Here are some highlights:

* I am self-employed making a good chunk of change and I literally cannot get any insurer to cover my three year old son, because of his heart murmur. He has never taken any medication for it or gotten any treatment whatsoever. Once we took him to a cardiologist for a routine check, and he was being so fussy (my son, not the doctor) that the cardiologist said to just skip it and bring him back the next time. So my point is, my son is not a walking liability. When my agent explained that the various companies declined coverage for my son, I offered to pay higher premiums or attach a rider to the plan to exclude any payments concerning his heart. Nope. He's uninsured. (Incidentally, when you see figures for the millions of uninsured Americans, don't assume they're all shortsighted. They might have left their jobs and now literally cannot find a company who will pick them up.)


* Because of my switch to self-employment, our bank won't let us refinance our house. Just think about that for a few minutes. Since they are concerned I will default, they won't lend us the money to pay off our loan to them. So they refrain from earning closing costs etc., keeping us locked into higher payments on the loan they have already given us, because they are afraid I won't be able to afford the lower payments.


* Also, for those who are thinking of becoming self-employed, keep in mind that you have to pay both halves of Social Security (if you are unincorporated). You get killed on 1099 form income.

12 comments:

  1. You have to be registered to vote honey.

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  2. Stop complaining, you wouldn't go back to w-2. When you add up Transportation, entertainment, meals, equipment and the rest of the deductibles, you find they are well worth the self-employment tax.

    As an economist, you should recognize that wages pay both halves of the social security tax, the employer just gets the bonus of complaining, because it looks like an added cost of doing business. To him it might as well be included in the wages he pays.

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  3. I'm happy to see a perfectly content person has visited Crash Landing! But tell me, what are you doing here if you don't hate paying your taxes?

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  4. Woody,

    Hold the phone. Of course I am not saying, "It's a good thing the government makes employers pay half of Social Security, otherwise struggling workers would have it really tough."

    What I am saying is that you need to earn a much higher pre-tax income if you are self-employed, than if you are working for the man, in order to get the same take-home pay.

    So right now, a salaried employee (with medical benefits to boot) might be incorrectly estimating how much he would need to earn in order for it to make sense to quit his job.

    Yes of course there are offsetting things, the most significant being psychological. But even given that, I think you are exaggerating the deductions. Sure, I can buy a new laptop and deduct it, but most of the traveling I do isn't "fun." It really is a cost of the consulting.

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  5. Let's not be silly, I'm hate paying taxes as much as any rational person.

    I've been self-employed for the past decade or so, and I wouldn't go back to being an employee for anything. I used to commute from Connecticut to my consulting assignments in Manhattan. Were I an employee my direct commuting expenses (parking, mileage on my car, trains, cabs and subways, cellphones, drinks and meals) wouldn't be deductible. What's the $ per diem for meals without needing receipts? $35? 42 cents per mile for car, Ferrari or Camry! Can you beat that? Newspapers, continuing education... man, it's a wonder any self-employed person ever reports a profit!

    My wife works for an employer, which provides the health benefits, but we couldn't imagine not having at least one of us being self-employed.

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  6. OK you're right, Woody, rereading my post it makes it sound as if I'm warning people against becoming self-employed. That wasn't my intention. But I was stunned when I learned how much they take out of 1099 income (before I actually quit my 8 to 5 job).

    And I definitely reported a profitable year in 2007 to the IRS. The main input to the Murphy production process is sodium.

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  7. I imagine after ten years of self employment you're much better at the tax angle than we are. 2007 is the first year filing as self-employed, so it's like going from playing poker with buttons to playing with real money. The house wins more than we thought.

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  8. The government cannot force you to make good business decisions. ;)

    Glad to see you guys are doing well. Unless you're being hit with the AMT, bitching about taxes is a sign of prosperity.

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  9. My office is stocked with those Cup A Soup deals. The landlord originally had a microwave but then he moved it. So I can make hot water with my outlet, but can't microwave stuff.

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