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in this case would be to the United States Court of Appeals for
the Fifth Circuit. Consequently, we must decide whether to
follow the rationale of our Milligan opinion or the decision of
the Court of Appeals for the Ninth Circuit that reversed us.
Petitioner, of course, urges us to follow the Court of
Appeals' decision in Milligan and hold that the income he
received as termination payments is not subject to self-
employment tax. To the contrary, respondent asserts that we
should adhere to our Milligan opinion and conclude that
petitioner is liable for self-employment tax on the termination
payments.
Section 1401 imposes a tax upon each individual's "self-
employment income".2 "Self-employment income" is defined in
section 1402(b) as "net earnings from self-employment" with
certain exceptions not relevant to this case. "Net earnings from
self-employment" is defined in section 1402(a) as "gross income
2 A self-employed individual pays both the employer's and
employee's share of the Social Security tax. The self-employment
tax ("SECA") has two components, the Old Age, Survivors, and
Disability Insurance portion (OASDI) and the rate for this
portion of the SECA tax for 1990 and later years is 12.4 percent.
The second component of the SECA tax is Hospital Insurance
(Medicare) and the rate for this portion of the tax for 1990 and
later years is 2.9 percent. The combined rate of the self-
employment tax was 15.3 percent for both 1990 and 1991. In 1990
this tax was imposed on self-employment income of up to $51,300
and in 1991 on self-employment income of up to $53,400. In
addition, in 1990 the Medicare tax of 2.9 percent was imposed on
self-employment income of more than $51,300 but less than
$125,000, and in 1991 on income of more than $53,400 but less
than $130,200.
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