My only point is that payroll taxes aren't really a risk-based standard. Small business owners do take on different risks than employees, but they're compensated by long term returns, not by tax breaks.
It's not a question of risk, but what you risk and what you gained from the risk. My point is when you earn above market rates it's often because of risk to capital not effort. If what's making money is Work you pay SS if it's Capital you don't. If it's a combination of both you first need to pay SS / Medicare on a reasonable wage for what you are doing, but the extra earnings from Capital * Risk don't require SS / Medicare payments.
Under the current system, building an iPhone App is really two things taking a risk with some capital and building the App. If you work for a year and it makes 120k then you pay taxes as if you worked a normal job. If you make zero you pay taxes as if it was a hobby.* If you make 10 million, you pay taxes as if you had a normal job that made ~140k AND made 9,840k from an investment.
This is reasonable because when you earn a normal salary from your work your risk had zero return so you pay zero taxes on the risk. If anything it's when you earn less than market rates when it gets tricky.
*(I don't know what the actual tax ramifications of this are. If you do major home remodeling while unemployed you are not supposed to be able to collect unemployment even though you don't have a direct cash reward. In theory you might be required to pay taxes on the work you did.)
