Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open.

Are services provided to Google employees taxed as income or in any way?
(1). Is this right? Pretty much, though this is a really rudimentary way to think about it. (2). If it is, why is it that extensive services are provided by high margin companies competing for talent, rather then lower margin businesses looking to boost their profits by reducing their expenditures on employees (by cutting out the government)? It's the polar opposite of that. Google (and companies like that) do things like have a day care center on premises.  The company staffs a day care center which has costs, then lets employees use it for free.  This is a business expense for Google, and in relative terms, a considerably large business expense that a lower margin business could no afford. Employer healthcare is a tax protected expense for employees via section 125 of the tax code.  The company portion of the healthcare costs are a deductible business expense to the company, as expected.  Healthcare is different than most other expenses because the employee can forego income before it's effectively received which negates it from taxable income.   This doesn't work for something like food purchased at a cafe on a Google complex.  If employee money is being spent at a corporate cafe, it's taxable income being spent (though the cost of running the cafe is a tax deductible business expense to the company). There have been discussions in congress to assess a value as income to employees for services like on site child care and no cost employee cafeterias. To address your new example: For example, suppose John Doe makes $100,000 a year taxed at a rate of 20%, for a take home pay of $80,000. He spends $10,000 on food. His employer Corporation decides to give him all of his food and deduct it as a business expense - costing them $10,000. But now they can pay John Doe an amount so his take home pay will be reduced by $10,000 - $87,500 The company is now spending $97500 employing John Doe, for a savings of $2500$. This would be an audit prone administrative nightmare.  Either You need John to submit receipts for reimbursement up to the $10,000 agreed upon amount which would require some kind of administrative staff, or After a very short period of time John forgets the abstract value of the food cost arrangement, that is only really benefiting the employer in the form of lower payroll expense, and is enticed away for more pay somewhere else anyway.  The company may be saving $2,500, though again there will be an additional administrative expense of some sort, but John is only saving $500 ($97,500 * 0.20 - $100,000 * 0.20).