I've been a self-employed engineer for about 3 years now, and I totally agree. You don't really get a direct financial benefit. I think you're a bit off on some of your assumptions though. Depending on your job, you definitely don't spend 2 hours for every 8 doing paperwork. If your an engineer like me, it means 1: you have to keep track of your own hours, and send invoices. I just keep track on my phone, and type it up once every 2 weeks, takes about 30 minutes. and 2: your taxes will be much harder. You can save a lot by itemizing, so you really have to do it. That means keeping track of receipts (thank god for the internet), and all that jazz. Basically your taxes go from taking like ..3 hours, to taking a full 1-2 days.
There are other benefits too though. The biggest one for me is that people treat you differently. They know you're hourly, and they know your hourly rate is high, so people try a lot harder not to waste your time. Like if everything's set up and you're just waiting for some parts you overnighted to come in, instead of being expected to kill half a day doing menial tasks, you're expected to take a hike, come back tomorrow. Some people wouldn't like that, but I LOVE it.
There's another benefit that's sort of subtle. I find negotiations to be WAY easier as a contractor. If I think I deserve a raise (and you know, usually), I can just say, "hey, so my rates going to go like 30% soon, you know [this reason], [that reason], are we still good? Obviously I can wrap things up at the old rate if you need". Every time, they're like "ok but we might have to hire you less". Now, they do really think that, but it's just a human reaction from the negotiator. When it shakes out, if they really need you they'll keep hiring you just the same. ..There, you just got a raise, and there was no bullshit like "you have to wait 6 months until we do compensations reviews, and then maybe we can get you half of what you're asking for"
Edit: also, there's quarterly taxes, but honestly last year I just didn't pay them, and instead made a spreadsheet and saved up the amount I would owe. I think the penalty turned out the be 25$ so that's what I'm doing this year too.