IRS Nails CPA For Copying Steve Jobs, Google Execs

theodp writes "It seems $1 salaries are only for super-wealthy tech execs. The WSJ reports that CPA David Watson incurred the wrath of the IRS by only paying himself $24,000 a year and declaring the rest of his take profit. It's a common tax-cutting maneuver that most computer consultants working through an S Corporation have probably considered. Unlike profit distributions, all salary is subject to a 2.9% Medicare tax and the first $106,800 is subject to a 12.4% Social Security tax (FICA). By reducing his salary, Watson didn't save any income taxes on the $379k in profit distributions he received in 2002 and 2003, but he did save nearly $20,000 in payroll taxes for the two years, the IRS argued, pegging Watson's true pay at $91,044 for each year. Judge Robert W. Pratt agreed that Watson's salary was too low, ruling that the CPA owed the extra tax plus interest and penalties. So why, you ask, don't members of the much-ballyhooed $1 Executive club like Steve Jobs, Larry Ellison, Sergey Brin, Larry Page, and Eric Schmidt get in hot water for their low-ball salaries? After all, how inequitable would it be if billionaires working full-time didn't have to kick in more than 15 cents into the Medicare and Social Security kitty? Sorry kids, the rich are different, and the New Global Elite have much better tax advisors than you!"

Comments

Re:Why should the Rich pay Medicare and SS and EI?

[roman_mir]

Well, clearly, you want class warfare.

The rich are contributing, they are constantly working, using their investments to hire people, to produce stuff.

Today in USA of-course that's not how it is in many cases - the government has usurped the wealth and now all the sane rich investors have left the country, so it's not as easy at this point. But it still cannot be turned into a bloodshed through a real class warfare, because this is gov't washing their hands off of this entire fiasco, pointing fingers at people who are legitimately providing something to the society.

Every time you walk into a store and buy some food or a pair of shoes, you are already benefiting from all the things, from organized capital and labor that the rich have provided you with.

People are dying alone and hungry because the government has turned against the ideas of Constitution and capitalism, and turned dictatorial/oligarchical/socialist on your ass. Those things end badly specifically for the poor and the middle class, and I hope the rich escape those problems by moving their wealth and persons out of the harm way, because once the dust settles, the society will have to be rebuilt, and it won't be the poor and the revolutionaries who'll be rebuilding it.