4 ms·
Didn't those contractors have to pay payroll taxes through self employment tax then? The govt gets the same amount of tax in the end AFAIK. So those contracto
by woolvalley 9y ago
Didn't those contractors have to pay payroll taxes through self employment tax then? The govt gets the same amount of tax in the end AFAIK.
So those contractors basically have ~%8 less pay because they pay the employer part of the tax, unless MSFT paid them more to compensate.
So what is the incentive for MSFT to do that in the first place? Is it just to fool the people who don't realize they might be paid less in a complicated way?
- walshemj 9y agoThat struck me as odd as IT contactors in the UK are paid a lot more than FTE's and have much better (still) tax advantages.
- bzbarsky 9y agoContractors have to pay the "employer" half of FICA (social security and medicare) themselves, true. But there are things other than FICA that employers have to pay for employees but not contractors. The most obvious one is unemployment insurance, both state and federal. There are likely others, in various location-dependent ways. Obviously contractors effectively self-insure for unemployment; this is a major reason why contractors are typically paid more on a nominal basis than employees are. In addition to that, there are compliance costs with employees (having to do tax withholding, pay reporting requirements to states and the IRS, etc) that are somewhat lower with contractors.