He's a consultant, so not really. He's liable for quarterly "estimated tax payments", which should be 1/4 of the expected amount you owe to the government for

He's a consultant, so not really. He's liable for quarterly "estimated tax payments", which should be 1/4 of the expected amount you owe to the government for the year. But it's best to pay the minimum required by law, and bank the interest on the rest. Also, he's wrong saying that the tax rate applies to the whole income. This isn't that hard people. EVERYBODY pays the same tax rate on the first chunk of money. Then, a higher tax rate on the second chunk. Then a higher rate on the third chunk, and so on. The last chunk-cutoff is at $250k. So you only pay the higher taxes on anything OVER that amount. So you make $255k per year, you're only getting a tax hike on the last $5k, and a tax cut on the rest (Assuming all of Obama's tax rhetoric on lowering taxes for everybody else is true, haven't looked close personally). That's not to say that that self employed people (running a business w/ employees, or just a contractor) don't get screwed. There is another tax to cover social security. If you work for an employer, it's split half and half between the employee and the employer. But, since you are your own employer in the case of contracting work, you owe both halves. This is what's called the "Self Employment Tax". Although remember that economics says that the business will just respond to this tax by lowering your salary the same amount, making you pay the whole tax anyway.... Anyway, the tax system really isn't that complicated. There are lots of little details, but the basics of it are fairly well thought through, and are reasonably fair.