I think you also need to included the social security and medicare taxes into the calculation:
Compared to self-employees, employers paid 7.65% up to $118,500 and 1.45% of medicare tax after that.
So, let’s use the $500k income high salary w-2 employees as example, employer(s) will contribute about ~$21k pre-tax money on their behalf.
In addition, the two high w-2 employees will have health care benefits, let’s assume employer contribute $14,000 a year.
How about 401k matching? let’s say employer match dollar per dollar, and that is $17,500 pre-tax money.
That’s about ~50K of pre-tax benefit that self-employee who is making $500k need to deduct to get the same benefits as high w-2 people. If we assume tax rate of 40%, you need to find a way to deduct ~$125K a year to match that? Is this feasible? Sure. Is it likely? You guys tell me.
