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I often wonder why I can't be paid the amount straight and let me take care of my medical, transport, house, taxes instead of the company.

I am asked how much is my salary to which have an answer, but then at some places I am asked what is my base salary now that become approx 50 % of what I actually get so answering that becomes embarrassing.

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    This seems a bit unclear. Though I assume in many locales, legal matters account for much of the reason. I don't imagine many governments would want to put responsibility for all tax withholding entirely on the shoulders of individual taxpayers (or that most taxpayers would welcome the extra overhead in terms of compliance). – aroth Jul 28 '14 at 6:15
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    This seems more like a rant and less like a question. You'd probably be better speaking with your HR about what you can cover yourself. – user9158 Jul 28 '14 at 6:53
  • I dont think base salary is and issue while negotiating salary..it becomes an issue while taking loans – amar Jul 28 '14 at 9:08
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    why wouldn't you not answer with your gross salary are you sure they are not asking for your salary without bonus's – Pepone Jul 28 '14 at 9:19
  • With income taxes it's quite possible that your govt requires that your employer collect them for you to minimize the ability of people to cheat on them. For a lot of taxes in the US I know this is that case; but don't know anything about Indian tax law. – Dan Neely Jul 28 '14 at 16:01
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Be careful here; don't get confused, please. Base salary is a term of art for the total amount of your salary but not any bonuses or commissions.

If you have a base salary of US$5000 per month, you'll find that taxes and your share of health insurance (etc) are deducted from that base salary. Take-home pay means the amount left over after these deductions.

These deductions do indeed take a big chunk out of your take-home pay. Still, when you apply for a loan or a new job, you can tell them you make a base salary of US$5,000 per month.

Now, if you make $1,000 in base salary, but get paid commissions on top of that, you'll probably have a variable monthly income. If you close a big deal you'll get an extra $10,000 one month, but if your customers are all on vacation you'll get nothing extra in July. That is a more complex story to tell to somebody when you apply for a loan. You'll probably need to show them yearly averages.

The same goes if you get a big bonus one month each year.

Yes, it's annoying that there are so many deductions from your paycheck. If you don't want that, you can work (in the US) as an independent business person. But then you have to handle your own estimated-tax payments, benefits, retirement savings, unemployment, life insurance, and all the other deductions.

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Some companies offer you choices regarding housing, and transportation expenses (I know Amazon does this, I have a couple of friends who work there) where they can either subsidize you the cost of those "services" or compensate you extra if you decide to take care of it on your own. For instance, a friend of mine had 10k added to his "relocation" package because he decided to take care of his own housing/relocation expenses.

My understanding of medical is that it's probably a lot cheaper for both you, and the company to just have the company pay for it since they have all their employees insured with the same provider.

With taxes, it's hard to answer since every country (and many states/provinces within a country) has different tax laws.

If someone asks me how much my salary is, I would just tell them my gross salary. They don't need to know how much I actually make.

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I am asked how much is my salary to which have an answer, but then at some places I am asked what is my base salary now that become approx 50 % of what I actually get so answering that becomes embarrassing.

You are mixing terminology.

  • Base salary - this is the amount, pretax, a company pays you. It would not include bonuses.
  • Take-home pay - this is how much you receive after taxes/deductions. This appears to be what you think your "base salary"

I often wonder why I can't be paid the amount straight and let me take care of my medical, transport, house, taxes instead of the company.

There are too many factors here for a company to do this. Using the United States as an example:

  • Your taxes are different depending on how many dependents you have (children, spouse, etc)
  • Many companies have multiple medical plans which also vary based on children
  • Your taxes can vary based on voluntary deductions (401k, 403b, HSA, pensions, etc)

You as asking a company offer "take home pay." But this is dependent on far too many things for a company to realistically budget for. Some people might cost them considerably more than others.

If you want to take care of everything, many independent contractors effectively pay their own taxes. This might be an option if you are specifically interested in this.

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What's embarrassing? Every employer doesn't pay their employees a salary, they give them a compensation package. Salary is only part of the compensation package, unless your employer pays you off a 1099 tax form, in which case, you pay off ALL of your costs - medical, etc. - off the money they hand you. A 1099 is a lousy deal, unless your highly rate is high enough - say twice your salary - to make it worthwhile.

As a rule, your benefits amount to 25% to 50% of your compensation package. As a 1099 contractor, you not only get to pay for these benefits out of your own pocket, you get to pay self-employment taxes, too. That's why if a salaried person gets $60K or $30/hour in salary, a 1099 contractor will ask for $60/hour.

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