Your tax "service" will view it as an employment benefit, which is taxable just about everywhere. The biggest issues is that an employers gets to write off your wages as an expense. They don't necessarily get to write off your mortgage/rent, utilities etc unless they can prove that it was a direct cost needed to earn an income. If a business owner can't write off money that they spend, they don't want to spend it as they will pay tax on it (usually at the highest possible tax bracket). The only way that becomes a win for the business owner is if they can pay significantly less than the normal rate, so when they pay the taxes, they don't come out at a loss....this is why illegal immigrants are paid under the table and at much lower rates than an official employee.