The tax proposals Trump discussed during the campaign would reduce burdens of the current corporate tax structure and give more Americans the freedom to chase their own ‘American Dream’ of independence—but cutting taxes alone is not enough.
First, the administration must be careful not to paint today’s independent with a “one size fits all” approach. Despite media attention to the contrary, most independent workers aren’t dissatisfied Uber drivers or TaskRabbits. In fact, 83% deliver a professional service to clients, such as marketing or IT consulting. Independent workers are among the nation’s most satisfied—and well compensated—with 78 percent of current independents saying they plan to stay independent or build a larger business. 28 percent of independents make more than $75,000 per year. On average, they make $64,450, a 30 percent growth from 2011. By contrast, the U.S. median household income was just $53,657 as of 2014.
With contributions of more than $1.1 trillion to the U.S. economy each year, independents are also significant contributors to economic growth. In the past year, independent workers spent $95 billion hiring other independents, the equivalent of employing 2.3 million full-time workers. If barriers to innovation were removed, there’s no limit to how far these workers could go to further their own American dreams, and to help the economy in return.
Of course, this innovation will need some support.
First, the administration must work to clarify existing legal structures in place from organizations such as the IRS and Department of Labor (DoL) to properly draw the line between compliant microbusinesses and solopreneurs and workers that need protection.
A “safe harbor” for independents willing to proactively declare themselves to be compliant is also necessary. This would provide independents and the businesses that want to hire them a simple, yet compliant way to do business together. This categorization, a Certified Self-Employed solution, will also enable the easy collection of taxes and regulatory oversight to ensure that the system is not misused.