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When I was in the midst of my last job hunt, one course of action I seriously considered was to abandon "regular" jobs altogether and earn my living as a freelance writer.
For a variety of reasons, many of which are encoded into our tax system, I did not take that course. A very good article in the April 27, 1998 New Republic outlines the systematic discrimination that "free agents" face when tax time comes. But there's hope. In that TNR article, Daniel H. Pink points out that although the tax code "was designed in an era when big business was ascendant and free agency an exotic choice," the numbers are quite different now. Pink points to 14 million self-employed workers in the United States, 9 million independent contractors, and 2.5 million temps. Change may be in the wind.
Free agents may be artists, consultants, or entrepreneurs who have just set up a Web site to sell Grandma's cookies. Independent contractors usually do regular work for a company or companies, but do not have the privileged status of "real" employees. Temps are another group which may or may not be included as free agents; some temp agencies actually provide benefits and most send employees W-2's like regular employers, but some operate like independent contractor reference brokers.
Here's how these folks are treated by our tax code. For starters, they are taxed twice for Social Security, because in a traditional situation, employers and employees share that cost, but free agents are both employer and employee. With health insurance, it's even worse: Not only do free agents have to pay their own health insurance premiums, instead of sharing that cost with a traditional employer, but they cannot deduct the cost of those premiums from their taxes, the way a traditional employer can (which makes offering benefits more attractive to traditional employers). Finally, most self-employed people are required to file estimated tax statements four times per year, instead of just once in April. In short, free agents are faced with a tax code that is more difficult to interpret four times more frequently than traditional wage earners. Hard to swallow, isn't it?
But help is on the way: Senator Kit Bond (R-MO) recently introduced a bill proposing a 100-percent deduction of self-employed workers' health care premiums. This measure was defeated, but Bond was able to push through a 45 percent deduction, which takes effect with the 1998 tax year.
There are also organizations which provide a voice for free agents, most of whom are too busy filing tax forms to lobby for improvements. The Electronic Freedom Foundation has helped many freelancers with questions about intellectual property rights, which affects their earning power. A political group called Working Today serves as a lobbying organization for free agents, and has nearly 60,000 members. A growing number of Web sites are devoted to telecommuting, freelance job opportunities and the résumés of freelance workers. Free agents are becoming more visible and more powerful, and I say, more power to them. Maybe the next time I switch jobs, I really will end up working for myself.
Wendy Cholbi is a writer who lives with her husband, a philosopher, in Boston. Free agency is looking more attractive to her every day.
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