I don't really care about the legal status. I was suggesting that, as a truly independent contractor, you can set your own rates and if you're fulfilling your contract remotely you can certainly choose to charge the same whether you're in SF or a beach in Thailand.
I care if it's legal or not. But hiring people as full employees requires certain legal structures/organizations to be in place in a location. There are costs associated with setting up those structures. This often doesn't make sense if there's only one person in a country or other such political entity.
Small companies do indeed not expand geographically for this reason--or hire through a partner or other entity that is already established there.
