undefined | Better HN

0 pointsTylerE8y ago0 comments

Perks have the advantage of being pre-tax.

So if you get $10 worth of perk (assuming it's something you'd buy anyway), it only actually costs you somewhere between $5-8 depending on your tax bracket.

0 comments

geofft8y ago

Why? That is, is there some specific social good that the authors of the tax code were intending to accomplish by allowing companies to pay for lunch for their employees pre-tax, or is this an unintended consequence ("loophole") of some other coherent goal?

It seems to me like there isn't any reason for a tax code to allow not paying taxes if the company is calling a transfer of money to the employee for the purpose of buying food as a "perk", and yet tax the same money if it's called a "salary".

TylerEOP8y ago

Nothing that high minded. You are simply taxed on income. Money the company spends isn't personal income.

geofft8y ago

But that interpretation has ridiculously easy loopholes - why not just reduce my salary by $10K and give me a $10K company-managed Amazon budget for personal expenses? Why not just let the company book my personal vacation travel via payroll deduction? Why not have the company rent my apartment and sublet it to me? etc.

I'm coming at this from the position that the law must say, if you're giving a person access to a cash spending account that lets them buy things for themselves but not giving them the cash directly, that still counts as income. Is that true? If it's not true, why isn't everyone taking advantage of the loophole? If it is, why is lunch a special case?

1 more reply

j / k navigate · click thread line to collapse

0 comments

geofft8y ago

TylerEOP8y ago

Nothing that high minded. You are simply taxed on income. Money the company spends isn't personal income.

geofft8y ago

1 more reply

j / k navigate · click thread line to collapse