[ransom1538]

FYI American worker: When an international employee makes $40 per hour and they perform two weeks of work -- their US employer sends them 80 * 40 = $3200. No Federal Income Tax Withholding, no Social Security and Medicare deductions, no Federal Unemployment (FUTA) Tax, no State withholdings, nothing. Employers love it. No drama.

Just straight gross cash.

[puszczyk]

Well, they likely need to pay income tax and social insurance in their own country. The burden has just been shifted to them.

To be fair, I’m not 100% sure how this works in the US, in PL where I’m from and probably in all of the EU countries if you are on a job contract then the employer pays the taxes and social insurance for you. If you are self-employed / freelance you have a business registered in your name and it’s your responsibility.

Either way, I don’t see how the taxman’s cut disappears. Also lot of countries have higher taxes + social insurance than the US.

If you really want to make a case, you can say that the contractors from a low-cost-of-living countries may undercut American workers (but then, if they work remotely I think they mostly undercut the office jobs, not “workers”) because they ask less money for the same.

[adanto6840]

Works pretty much the same in the US, too.

When we pay US contract labor, we generally send the "gross cash amount". The US contractor actually has to fill out a form upon commencement that says how their taxes & social insurance will be paid; at the end of the year they get a form from the businesses they did work for which shows total paid, and they use that to do their taxes.

Same thing for international contractors -- they just have to deal with their local jurisdiction's taxes, instead of the US IRS.

[novok]

He is talking about avoiding paperwork & payroll management stress, not avoiding taxes per say.

[ska]

This is just moving things around. The international employee deals with equivalent of withholding etc. It's exactly like a self-employed consultant/contractor locally, they should be factoring this into their hourly rate (including things like paying their accountants to sort out taxes, etc.).

If wage disparity is big enough, it can still be a "win".

Also it doesn't always work this way, often US companies have subsidiaries to handle payroll etc. in other countries.