There are ways around this. Many guys have a sub-S corp, and contract through one of the big contract houses.
The company hires the programmer, and pays the big contract house. The contract house deducts 10%, and pays the sub-S. The programmer than pays himself on a W-2.
Of course, this is ridiculous. Congress should create a category of temporary professional worker. Companies would be able to hire programmers and other professionals directly, provided they paid at least 5 times the minimum wage and gave at least 35 hours per week. Companies would pay their share of FICA, FUI, and SUI, but nothing else. Temporary workers could not deduct anything, and would not have to file a sched C or set up a corporation. Everybody would win, except the contract houses.
Bottom line is that government collects a lot more taxes in this scheme than if the guy could be regarded as an independent contractor.