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Author: vargaj Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 124215  
Subject: Re: To convert or not to convert? Date: 8/14/1998 4:34 PM
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"The self-employed pay it all ... and ... your employer does calculate that cost into their decision on how much "salary" you're going to get."

All of this is true, but self employed persons deduct 1/2 the SS tax as employer expense. The point is that the Govt only receives taxes on 1/2 your SS contribution. And as far the employer goes, he not only figures SS, but also Federal unemplyment compensation tax, State unemployment compensation tax, in CA there is State disability. Employers' expenses go on and on. So what? In the end 1/2 of your SS is taxed, 1/2 is not. You could be fair and tax 1/2 on the way out, but that wouldn't take in to consideration the "gain" achieved by the fact that your benefits, at some point, for most people, will exceed their contributions.

In my mind, a very sensible way to do it would be to tax SS 100% to the extent that benefits exceed contributions.

Joe Varga
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