The forthcoming change in U.S. Federal Tax policy has a number of interesting qualities. I am using the word “interesting” in its most general sense, perhaps as one might say (for example), “Isn’t it interesting how a giant meteor destroyed all life on that planet.”
One interesting result of the new tax structure will be the disparity in the way it treats wage earners and independent contractors. An employee and an independent contractor performing the same job, at the same salary, will soon find themselves in very different situations: The income tax paid by the salaried employee will increase significantly, whereas the tax paid by the independent contractor will decrease significantly.
Federal monetary policy is a strong influencer on the economy, so let’s look at the kind of market forces we are talking about here. There will now be a strong tax incentive for people to work as independent contractors, rather than as salaried employees.
Also, companies may start to look more like agencies, farming out work to independent contractors rather than maintaining an official salaried staff. Companies that follow such a policy will look more attractive to workers, because of the tax advantages they will offer.
Independent contractors in any given field will likely begin to organize into professional Guilds, just as they started to do in Europe a millennium ago. The very fabric of our economy may mutate into something else entirely.
It will the dawn of a New Guilded Age!
Independent contractors currently pay significantly more in taxes than regular employees. Between the employee and the contractor, the employee is taking home way more money. Which is part of the reason that in practice, contractors charge much, much more than employees for the same job.
Source: Am an independent contractor in the entertainment industry.