Dwain Northey (Gen X)

https://www.usatoday.com/story/money/taxes/2023/02/21/how-do-rich-people-avoid-taxes/11308215002/

This is a time of year most of us do not look forward to because in a few short weeks everyone’s taxes are due. Even if you don’t owe anything the copious amount of paperwork needs to be submitted so that the tax man doesn’t come a callin’.

I learned something new this morning and it how CEOs, CFOs, the ultra-wealthy manage to pay little of no tax by exploiting the current tax law. They are honestly not breaking any laws they have just found a giant hole that only people of extraordinary wealth are able to step through.

I never understood how CEO’s of large companies, with a straight face, that their salary is equal to or less than a median income employee of the same company. Well because they are paid in stock options. The question remains if they aren’t paid “more” how is it that they can live such extravagant lifestyles. Here is the loop hole, they acquire low interest loan to subsidize their lifestyle using their stock options as collateral… wait, what? I had the same response.

I am not an accountant but this is how I understood how the process works. A COE gets, let’s say, $90k annual salary but on top of that he gets $5million annually in stock options. Now for the big pull the wool over that world’s eyes moment. They have a lifestyle that requires $1.5 to $2 million, well they take out a loan at very low interest rate to support that lifestyle and when tax time comes the stock options are not taxable because the options are assets not income. Ok but the $90k salary is still taxable right? Yes it is but the interest on the million dollar loan is deductible and literally offsets the meager salary. Wala the IRS gets a big fat zero and Mr. Fat Cat gets to play the same game next year. He gets to fly on a private jet while all the employees get to pay taxes so that his executive airport can function and the roads his driver takes him there in are paved. Thank you to the working person so that your COEs and CFOs can continue to live their lavish lifestyles.

System is broken there needs to be an asset tax, anyone who owns a house pays property taxes. Guess what folks that is an asset tax, registering your car, asset tax, even if you don’t fully own it.

Now that I have completely saddened or enraged you… have a good time doing your taxes.