Re: Yet another push for us to all go work at Tesco
Bit of a different situation here in the US on this issue. If I understand the controversy in the UK properly, IR35 was designed to crack down on independent contracting in cases where the person "should" reasonably be considered an employee, because they then aren't paying certain taxes that an actual employee would have had to pay, thereby denying the benefit systems some of the tax revenue they otherwise would have received?
In the US, you actually come out WORSE if you're a contractor, and the benefit systems get the same amount either way. This is because normally, aside from standard income tax, employees have taxes withheld for social security and medicare. However, the employee only gets charged half of the actual tax
amounts, with the rest being the employer's responsibility. If you're self-employed though, then the entire amount comes out of your income. This amounts to something like 6 or 8% of additional tax on the same amount of income.
I was self-employed for years as an IT consultant, so definitely had to deal with this. You obviously aren't getting any benefits from an employer either (health care, retirement contributions, etc), which is another potentially large hit to your income. However, you are presumably/hopefully making significantly more overall income and still coming out ahead. If you're not, then it was a poor choice for you to be self-employed unless you're getting less tangible benefits (controlling your schedule, etc).
The other headache for self-employed people here in the US, is that since no employer is witholding estimated taxes from your income and remitting them to the government, you're required to pay quarterly estimated taxes 4 times a year (since you can't possibly be trusted to hang onto the owed tax amounts until they're due once a year). This is always fun, especially if your income is pretty variable, because if you "guess" incorrectly, and the amount of tax you've sent in isn't at least 90% of what you end up actually owing for the year, you're penalized.
So I'm not sure something like IR35 would be as likely to be implemented in the US, as there's no financial benefit to the government for doing it. Though, some states like California HAVE passed something similar due to the perceived "unfairness" of people like Uber/Lyft drivers being contractors and those companies not being required to give them benefits, so you never know.
Biting the hand that feeds IT
