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I think the point is if you're a contractor and you're not getting the same rates as an equivalent company would for that contract/position you're under-selling

I think the point is if you're a contractor and you're not getting the same rates as an equivalent company would for that contract/position you're under-selling yourself. As for the "tax trick" you still don't get out of paying income taxes on the entire revenue you generate. You just pay employment taxes on the portion that is salary. Whether that's "fair" or not is open to debate of course.

TAForObvReasons 5y ago
When contracting, in addition to self-employment tax, you have to consider risk of not having paid work for a time and other lost benefits like health care. The rule of thumb I've heard is $1 as an employee ~ $1.50 as a contractor. The trick discussed by the parent pertains to S-corporations, which allow you to take distributions as long as you pay yourself a reasonable salary