In general this is a result of the mindset which says "I know better than you how your earnings should be allocated" combined with the idea that employers are much easier to regulate top down (through regulations, fines, licensure, etc.) than individual employees are. Taxation/governmental revenue boards or organizations struggle as is to keep individuals honest, and adding the burdens and complexities of business income/expense reporting to individuals is just begging for more (unintentional) disconnect between what they expect to receive vs what an individual expects to pay. Not sure either direction (employee vs contractor) is a good solution here. More likely a simplification of the system is needed.