I now make a lot more than that with a W2 job as my primary source of income and my effective federal tax rate was about half of what it was that year.
IMO FICA cap should be raised significantly and the rate should be reduced. There are entry-level FAANG employees who aren't paying their full salary into it. But that's an entirely different topic.
When you are self employed then you pay both sides.
It’s pretty fair.
From the perspective of someone like me, my W2 job already puts me in the 24% bracket this year. If you use a platform to freelance, they'll take their 5-20% cut, you'll owe FICA at ~15%, ordinary at 24% (a little less because W4 withholding tends to overestimate), and state taxes at 5-10%. It's fair because those are what the rates are and I know what I'm getting into, they just appear higher at first glance.
It's also easy for me as a software engineer to set my own rate to account for the extra taxes I'm responsible for. In fact, my rate is significantly higher on the one particular platform where I'll only see ~$150 of the first $500 billed to a new client after everyone takes their cut (on which the client also pays ~$10 in transaction fees to the platform).
It's nowhere near as easy for a Uber/Lyft driver to do so since their rate is set for them by some algorithm that tries to balance supply and demand. These companies went out of their way to classify drivers as contractors, but still want to present an interface to the riders that tells them that they're taking an Uber and not that they used Uber to find an independent driver.
IMO they can't have it both ways. Drivers should be able to set their own rates and riders should be presented with a list of drivers and rates to pick from. Uber still gets to take their cut and they can still set up surge pricing as a % of the driver's rate. There can still be an option to pick the cheapest driver for those who don't care. This would better reflect what these companies are trying to legally classify themselves as.
