Billionaires with $1 salaries - and other legal tax dodges the ultrawealthy use to keep their riches

[marmar]

Billionaires with $1 salaries – and other legal tax dodges the ultrawealthy use to keep their riches
Published: December 17, 2025 8:47am EST

Ray Madoff
Professor of Law, Boston College

Ray Madoff, a Boston College law professor, has written a new book: “The Second Estate: How the Tax Code Made an American Aristocracy.” She recently spoke to Kara Miller, host of the podcast “It Turns Out,” about how the American tax system has changed over the past 40 years, widening inequality. Below is a condensed and edited version of the interview.

Miller: Mark Zuckerberg was the lowest-paid employee at Meta in 2024, and he made US$1. But he is not the only very rich person who has collected $1 for a year’s work. Why would incredibly rich CEOs make only $1 a year when they could pay themselves millions?

Madoff: The reason is taxes. Income from work is the most heavily taxed type of income, as it is subject to both income and payroll taxes. A self-employed person who makes a modest income of $60,000 will pay over $13,000 of it in payroll and income taxes. Meanwhile, high-income earners who earn a $400,000 salary can pay about 30% of their income in payroll and income taxes.

So the first step in avoiding taxes is avoiding salary, and that is what our richest Americans often do.

Elon Musk received a salary of $0 from Tesla in 2024. Jeff Bezos earns $81,840 a year of income, low enough to get the child tax credit, which he took in 2021. One of our higher-paid billionaires is Warren Buffett, and he only gets $100,000 a year in salary and bonus combined.

All of these people are keeping their taxes down by keeping their salaries down. They are not avoiding compensation altogether, however, as they are well paid through the growing value of their stock. In 2024, Bezos’ wealth increased by $80 billion, Zuckerberg’s by $113 billion, Musk’s by $213 billion. Even better, they can enjoy this growing wealth entirely free of income tax and reporting. ...................(more)

https://theconversation.com/billionaires-with-1-salaries-and-other-legal-tax-dodges-the-ultrawealthy-use-to-keep-their-riches-271714

[surfered]

1. The IRS used to audit shareholders of S- Corporations (a pass thru entity).

If the owner was receiving distributions, it was assumed some amount, based upon time working at the entity, was wages subject to income and payroll taxes.

We advised clients to calculate the time spent in service to the company, assume an hourly rate, and file a payroll tax return and W-2, as there are penalties for failure to file those reports. After that , the IRS could only argue about the amount, a more subjective determination.

As always, pigs get fat, hogs get butchered.

[Timeflyer]

2. They contribute less (or zero) in taxes, but get to boss the boss who makes decisions impacting taxpayers.