[CAUT] CAUT pay, was Job Opening...

[Jeff Tanner]

On Oct 12, 2007, at 10:34 AM, Michael Magness wrote:

>  Being in the private sector isn't all it's cracked up to be, I pay  
> my own social security, self employment tax, retirement, insurance,  
> then there's the overhead. My phone bill is almost $100 a month,  
> just the one on my desk, then there's the cell phone, vehicle cost,  
> advertising, parts inventory, tools all of the things the  
> University provides for you. I have the feeling you have never been  
> in the private sector or if you were it was quite brief.


Hi Mike,
I do need to also address this misconception.

You have obviously been misled about what an employee is responsible  
for and what is provided.  I get the feeling you've never been an  
employee.

The university provides me with very little.  I think we'd all like  
to believe that ideally the university provides technicians tools.   
I've gradually begun accumulating "some" tools for the university  
shop by sneaking them into parts orders, but the vast majority of  
them are provided by me as required by my job description.  I have  
often bought items such as glue out of my own pocket because the  
purchase requisition process and cash reimbursement process is too  
aggravating to deal with.  And I sometimes take grand action work  
home because there isn't a work bench here deep enough to do grand  
action work.

Yes, my employer subsidizes a part of the social security and FICA  
(or self-employment tax), retirement and insurance, but a sizable  
portion of my income is subtracted from my pay to pay the remainder.   
Some states pay the entire amount for the employee, but the salary  
will be adjusted so that the take home pay winds up about the same.   
You don't want to get into a comparison on taxes.  Truth is, you pay  
those taxes on your net income.  I pay it on the gross amount.  The  
tax system is set up to benefit the business owner, not the employee.

And let's talk about overhead.  Phone bill, cell phone, vehicle cost,  
advertising, parts inventory, tools are all paid for on your schedule  
C.  (I don't consider parts inventory at issue here -- that is  
something you should be earning a profit on when you sell them).  You  
get to deduct every mile you drive, which should pay your car payment  
and more.  Every tool is covered before you are taxed.  Your phone  
bills are paid for before you are taxed.  Your home computer and  
internet service are all pre-tax expenditures.  From what I  
understand, there is a world of items the self-employed business  
person deduct that an employee can't.  Imagine now having all those  
items still to pay for, but instead having to do that with the money  
you normally have left over for food, clothing and other items in  
your home.

An employed tech pays for every one of those items that for you are  
pretax business expenses with after-tax dollars.  As an employee, my  
car, my cell phone, my home computer and my tools, etc., in effect,  
all pay taxes.  Retirement contributions and health insurance  
premiums don't even reduce FICA (self-employment) and Social Security  
taxes like they do for you.  Only income tax is affected.  And as an  
employee, I cannot deduct the value of tools purchased during a year  
unless it exceeds something like $1800 or more, whatever the amount  
is now.

I have no choice about how much money I want to put into a retirement  
account or what kind of account I want it to go into.  6.5% of my  
gross pay is deducted from my check to go into a pension fund.  Yes,  
there is an employer "match", but only to the extent that when I get  
to retirement age, the income I would receive is supplemented at that  
time.  I cannot borrow against the value of what I have contributed  
and if I leave employment and want to roll the accumulated value into  
a different investment vehicle, the employer match doesn't go with  
it.  All I get are the value of my contributions plus interest.  Some  
of the other schools (states) offer defined contribution plans rather  
than the defined benefit plans, but either way, once you are enrolled  
in either, you don't get to choose to not participate unless you  
resign.  You can't just say, I need to repair the roof, so we need to  
take care of that this month instead of putting money in our  
retirement plan.

The only way I get to use the same deductions you get is to leave  
this place every day and go into the private sector when I leave.   
Yes, I've been in the private sector for about 23 years now.  I've  
only been a full time CAUT for the past 9, almost 10 years, though I  
have done CAUT work almost my entire career.  I do get these  
deductions, but since I can only spend a fraction of the day doing  
self-employed work, obviously my deductions will be smaller.  Still,  
the amount of taxes withheld from my university paycheck is  
substantial.  According to my accountant, I can earn somewhere  
between $25K and $30K above my university salary before I will start  
to owe more in taxes that what is withheld.

Yes, that's including self-employment tax.

Jeff


Jeff Tanner, RPT
University of South Carolina



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