Failure to contribute

Abstract

While existing academic and government research has focused on the size, growth trajectory, and labor and tax law implications of independent contractors, freelancers, and workers selling goods and services online and through app-based platforms (the "on-demand" economy), less work has been devoted to quantifying the Social Security implications for the on-demand economy and its workers. Although it is known that self-employed workers have tax compliance and reporting issues, the existing reporting rules applicable to most workers earning income in the on-demand economy substantially increase the likelihood that these taxpayers are failing to contribute to Social Security and Medicare through payment of the self-employment tax (SE tax). As such, this paper sheds light on the Social Security implications of current federal tax rules for independent contractors generally and, in particular, workers earning income through occupations occurring in the on-demand economy by estimating the population and earnings of these workers using the U.S. Census Bureau?s redesigned Survey of Income and Program Participation (SIPP).