What if all the part-time college faculty became their own businesses?

This Paul Krugman column (https://www.nytimes.com/2017/12/14/opinion/republicans-working-class-taxes.html?rref=collection%” people whose income comes from owning a business rather than in the form of wages2Fcolumn%2Fpaul-krugman&action=click&contentCollection=opinion&region=stream&module=stream_unit&version=latest&contentPlacement=2&pgtype=collection) started me thinking…

Colleges and universities in the U.S. have moved, over the years, to a model in which an increasing share of undergraduate (and, in some MBA programs, graduate) teaching is done by part-time (adjunct) faculty.  I myself have been, and am again, an adjunct faculty member.  This is not my situation, but a large number of people teaching as adjuncts work for more than one institution, cobbling together something like a full-time work load (without, it should be said, full-time pay).

But the changes being made to the tax code will have lower tax rates for “people whose income comes from owning a business rather than in the form of wages,” as Krugman puts it. 

So what if…

What if higher ed institutions and adjunct faculty re-define their relationship…What if, instead of an employer-employee relationship, it gets restructured as the institution contracting with an independent business that does on-demand teaching?  I think this would actually further reduce the expenses of the colleges—they would not, for example, be paying the “employers’ share of OASDI taxes,  But, depending on the specifics, might it not also reduce the taxes of the adjunct faculty enough to make them better off as well?

Consider an institution such as the one I used to work at full-time.  Back then, it employed something over 100 part-time faculty who generally taught 2 courses per semester (4 per academic year), at a per-course compensation of around (these days) $3500 per course.  That’s about $1.5 million per year (including the institution’s share of OADSI).  The institution would save something over $100,000 in OADSI taxes by changing the relationship. 

And if the effective tax rate on the income of adjunct faculty members fell by 10 percentage points, the part-timers would save about $140,000 in income taxes (with the OADSI saving, that’s nearly $250,000;if the relationship gets structured as the law proposes, there would be no OASDI tax for the faculty to pay—this would be business, not labor income).  Win-win!