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Comment by smm2000 | Hacker News Reader

smm2000·

TIL that even students from top CS program have no idea about taxes if they think that housing stipend is taxed higher than ordinary income.

He is not alone though - compensation director at Box tried to convince me that higher salary is significantly better than lower salary + bonus because of higher taxes on bonus.

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There is some truth to this actually. Companies often charge both sides of payroll tax on bonuses, which adds another ~6%. IIRC some states have a bonus tax as well.

That said, higher base salary is usually better than lower salary + bonus because your annual raises are larger on a higher base. Variable comp also just kind of sucks period - you get a big windfall at some point in the year, but you can't plan for it because you don't know how big it will be.

6% is nothing compared to the raises or stocks or other random bonuses that come with working for a big tech company for a while and doing well. It seems really short-sighted to compare details about initial offers at such a minute level. Plus, Google offers other nice ways of evading taxes, like a good 401k plan.

I have never heard about companies charging both sides of payroll tax on bonuses - is it even legal? Anyway, Google does not do it and California does not have any extra tax for bonuses so it does not matter in this case.

With that, I agree that having higher guaranteed salary is better than having the same expected variable comp but the comment was about taxes.

If your base salary is enough to cover your expenses (and at Google it should be more than enough), it's not especially important to be able to plan around bonuses.

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