I’m not talking about the morality of it, but simply the financial. I also understand why an employee would like a little hidden cash from the IRS, but the employer misses the tax break.
For example, if I pay someone $20/hr, even adding on social security, unemployment and workers compensation taxes, I can still count the full amount against my personal or corporate income (25 to 39% savings). If I pay cash, then I obviously cannot.
So what are some reasons an employer might choose to break the law and cost himself money?