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More NYT idiocy on the Trump tax plan.

April 29, 2017

Just happened to run onto another mindless ramble from the New York Times.  Well, no, that’s not true. It was served up to me by Google’s news page.

Whatever.  What’s important is that the article in question, titled “Under the Trump Tax Plan, We Might All Want to Become Corporations” and penned by one Neil Irwin is a great example of someone preying on the general public’s lack of in-depth knowledge on a subject.

Mr. Irwin posits that if you are currently an employee, you should get yourself  a classy little business name and become a corporation.

Only that’s not exactly how it works, Mr. Irwin.  Take it from a freelance business writer, you won’t like the downside. What you are suggesting is that everyone become an independent contractor, or IC.

First the Internal Revenue Service would still class you as an employee if you were still subject to the same oversight and employment rules and there was no significant break in employment,  so it’s likely the NYT would just bid you farewell.

But wait, there’s more.

First, you would get to pay both the employer and the employee’s share of FICA, meaning that you would immediately take a 7.65% pay cut.  You may also be subject to city, county and state licensing fees.  Depending on the type of corporate identity you choose, you may have start-up costs, and have to generate corporate bylaws. That means attorneys, and those cost money upfront.

Then, you would get to carry your own business insurance, and if some disgruntled reader sued you for “forcing” them to make a bad decision based on your writings about economics, that’s all on you, bro.

And let’s not forget that many pass-through corporations do not fully shield you from personal financial or legal liability. The corporations that are legally fully considered “persons” are C-corps , and under the President’s plan their rate will be 35%, for pass-through income above $413,000 (single)  to $464,850 (married).based on 2016 brackets. Of course we don’t as yet know what the brackets would be on an AGI of from $90,000 to $189,300 (the single ranges covered by your current  28% tax bracket in 2016)

And all that is just the Federal impact of becoming a corporation. New York undoubtedly has some legal gems waiting for corporations as well.

Oh yes, and you would need to go out and shake the bushes for more clients, since if you only contract to the NYT, you are still, you guessed it…an employee.

But there IS an upside, for the NYT. They would not have to pay any benefits, carry workman’s comp for you, or manage your 401K if you have one.  Also, they would be under no obligation to even use your work at all.

Health insurance? Not unless you buy it yourself. Paid vacations?  Nope. Paid sick leave? Nope. FLSA? Nope.

You might also find yourself submitting articles that never run, and likely, the NYT pays their IC’s on publication, not submission.

Oh yes, and instead of getting paid every two weeks, you would wait until their accounts payable department got around to you.  Some major clients don’t pay out for 45 to 90 days.

And if having the IRS digging around in your financial records bothers you, let me assure you that you’d have to get over that hang-up as an independent contractor.

But sir, let me be the first to welcome you to the ranks of independent contractors. I can’t wait to see how you handle the real world.

From → op-ed

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