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Another Idea to Help Keep Social Security Solvent - CPA Practice Advisor
With Social Security projected to become insolvent by 2032, several solutions are under consideration. Kathryn Anne Edward proposes that employers pay taxes on subcontractors’ earnings. For instance, if an employer issues a 1099 for $100,000, they would pay a 6.2% tax on that amount. Alternatively, a user fee could be implemented that increases with the number of subcontractors, or both measures could be combined.
Under this proposal, self-employed individuals would no longer pay the employer’s portion of Social Security tax. This change may reduce demand for contractors and increase demand for employees. Self-employed individuals often minimize their tax liability, which leads to lower Social Security contributions.
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