Final answer:
A social security number is not required on Form BD for a non-U.S. citizen. Self-employed individuals pay self-employment taxes, including Social Security and Medicare taxes, and the social security tax is regressive as it applies a flat rate up to an income cap.
Step-by-step explanation:
When completing Form BD, a social security number is not required when the individual is a non-U.S. citizen. This is because social security numbers are typically assigned to individuals by the U.S. government who are either citizens or authorized residents. Non-U.S. citizens, particularly those who do not reside in the U.S. or do not have authorized work status, will not have a social security number and would not include it on Form BD.
Regarding self-employment taxes, if an individual is self-employed and the business is not incorporated, they are required to pay the self-employment tax. This tax consists of Social Security and Medicare taxes, and the rate is roughly equivalent to the combined employer and employee rates, which is 15.3% (12.4% for Social Security and 2.9% for Medicare). The first $113,000 of income is subject to the Social Security tax portion.
As for whether the social security tax is progressive, regressive, or proportional, since it is levied at a flat rate of 6.2% on employee income up to a certain limit and does not apply to income above that limit, it is considered a regressive tax. This is because higher-income earners pay a smaller percentage of their income towards social security tax relative to lower-income earners.