EMPLOYEES VERSUS INDEPENDENT CONTRACTORS: SOME TAX IMPLICATIONS IN PRODUCTION

摘要

Although the question of in-house production versus outsourcing has been extensively studied in production, it has been addressed with an implicit assumption of a tax-free world. The potential fiscal implications of misclassification of workers as independent contractors instead of employees have been barely taken into analysis in production even though they usually appear very costly for employers. Unfortunately, available employment classification criteria have been very vague until the IRS introduced a three-factor-classification. The main purpose of this paper was to create awareness of workers misclassification costs in production decisions.