Re: 42% of wage in direct federal and state tax
Rampant Spaniel, self-employment adds an additional 6.2% of FICA (Social Security) to the first 110k-ish and an additional 1.45% of FICA (Medicare) on all income. Regarding the 7.5% threshold, you (and I, and all other US taxpayers who don’t have their own personal accountant on beck and call) get our breaks either through the standard (non-itemized) deduction — that “‘free’ itemisation” — or through itemizing the deductions. Being discontent with one’s itemized deductions barely exceeding the standard deduction is a far cry from “barely getting a break” at all.
In your particular circumstances, you might benefit by changing your self-employment to becoming an employee of your own C corporation. For a C corporation, medical expenses paid on an employee’s behalf are completely tax-deductible (as long as every employee of the corporation receives the same medical expense benefit), so there is no 7.5% threshold to be met, as there is on an individual’s tax return. School fees paid on your behalf by the C corporation would also be deductible if the area of study is related to the work that you do for the corporation. By setting your salary at its current level, less the employer’s 7.65% FICA and less your medical expenses, and possibly less your school fees (all of which you currently pay out-of-pocket, but would then be paid by the C corporation), you would still be able to take the standard deduction on your individual tax return, and your lower salary would result in a reduced tax liability; not a “huge ass” difference on the scale of Double-Dutch/Irish Sandwich pokery-jiggery, but perhaps enough to make it worth a look. Taking this approach would be offset somewhat by the larger amount of paperwork that C corporations need to produce (e.g. filing quarterly FICA tax returns as well as annual corporate income tax returns, which can be considerably more complex than those that individuals file), so make sure that the cost/benefit tradeoffs make sense for your situation.
I don’t think that many people do like tax money being wasted. Fairness being in the eyes of the beholder, there are a few hundred pairs of eyes in Congress that need to have their eyes opened; but as long as US voters return the same people to the same positions of power, bistromath will remain the law of the land.