How the gig economy can save Social Security

Here's an idea for Social Security: We should tax the employers of independent contractors at the same rate that we tax employers of workers. Hear me out. Right now, if you are self employed, you pay both the worker and the employer side of the Social Security tax. Whatever you pay for just the employer, you double it if you're self employed. Now when Congress raised this tax in 1983, they understood it would be burdensome to the self employed, and so they gave them a tax deduction on the income tax side to try to ease that burden. But the self employed are a really important pipeline to small businesses in our economy. We want people to go out on their own and try to start their own business, which often starts as self employment. So having a heavy tax on the self employed doesn't necessarily make sense from a business dynamics perspective. At the same time, the self employed are highly encouraged to underreport their income and therefore underreport their earnings to Social Security, ending up with lower tax collection in the near term and lower benefits in the long term in order to keep their tax rate low. Well, that underreported income can hurt in more ways than one for Social Security's bottom line and for the worker down the road. It creates a massive incentive on behalf of employers to use independent contractors over workers because now they can save their FICA contributions through independent contractors. Misclassification has been a problem in our economy this century, where employers rather than hire someone as an employee, hire someone as a contractor so they don't have to meet Fair Labor Standards Act requirements and then they don't have to pay in Social Security taxes. That tax imbalance essentially incentivizes employers not to hire people as workers, but as independent contractors. So get rid of the incentive. Tax workers and independent contractors equally from the employer's side. That allows you to lower the tax rate on the self employed, encourage more business startups and self-employment on the back end and should even out the finances, maybe it'll cost a little less. Because the shortfall for Social Security has been around for 41 years, almost everything that's brought up in relation to Social Security is brought up in relation to the shortfall. But that's not the right way to evaluate policies for the program. It needs to be built to be purpose-fit for the 21st century economy. And what we've learned in the 21st century economy so far is that employers are trying to drop responsibility for their employees. They misclassify workers into independent contractors. Social Security doesn't have to suffer for that for the next 75 years. It can build in some protection and some revenue into their program's design, helping workers and the program in the long run. Now the people who would be hit hardest by this would be the companies whose profitability is built off of having workers as contractors as opposed to employees. But it's not necessarily fair for either Social Security or other employers that some companies get to be built off of a profit of paying less in taxes into a program. At the end of the day, Social Security is pretty simple in its fairness: Do you work? You pay into Social Security. Do you employ? You pay into Social Security. If for some reason that's not true, we ought to change it.