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WalterBright

The benefits are:

1. health insurance

2. stock options

3. so-called "employer's contribution" to social security

4. 401k employer match contributions

5. sick leave

6. vacation

7. maternity/paternity leave

8. stock purchase plan

9. unemployment insurance taxes

10. 2 weeks severance pay

11. holiday pay

12. various legal rights contractors don't have

13. employer provided equipment that a contractor would be expected to provide

Here's the first hit on google:

https://www.bankrate.com/finance/financial-literacy/the-valu...

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If we restrict this to people working in high demand engineer/software related fields, then I would say

#1,3,4,5,6,7,9,11 add up to at most 30%

And #2,#8,#12,#13 could be worth 10%. I don’t think #10 is a guaranteed benefit, and usually is in exchange for forgoing any other grievances you might have against employer.

But that would be restricting it to highly paid, in demand professions. For other people (upwards of 80% of the US), many of the items on that list don’t apply to them, so I don’t see how it would cost 40% more for an employee versus contractor.

Also factor in that some of these benefits are paid for with before-tax money, while if you paid them yourself they would be with after-tax money. This is not a trivial consideration.

As far as I know, the only tax benefit would be for health insurance, but if you are a sole proprietorship (which you should be), then you can purchase health insurance pre tax also.

401K contributions are also pre-tax.

With your own business you can contribute 2x the best employee 401k deal and it is also tax free.

https://www.mysolo401k.net/solo-401k/solo-401k-contribution-...

If you pay them as a sole proprietorship or llc, you also get to claim the tax benefits.

A sole proprietorship is almost as easy to file as a 1099, and a good choice when a liability veil would be easily be peirced (as you're representing your own skills)

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