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Originally Posted by Ultimate Newbie
Now, say i'm an upper class person. I once had a pretty good paying professional job (more likely to be private than government, but anyway). First thing i do is set up Soveh Corporation. I get a wage from my job, which goes into this corporation. on behalf of me, this corporation buys assets like real estate and shares (a mix depending on risk profile, a different matter). These assets generate income (rent, dividends) which can be re-invested into the corporation, or withdrawn from the corporation and paid to its owner (me) via its own dividend or whatever, to pay for bills and so on (a new source of income; wage and dividends). If i need a new car? well, the corporation purchases it on my behalf (a company car) - the liability is now the corporation's, not mine. Go to dinner with (my assumed) wife? Business dinner, out of the expense account of the corporation (to an extent). Remember, the idea of an expense account from your corporation is to spend as much money as you can, because you're corporation is taxed on the after expenses income for that corporation (so you're buying stuff with pre tax dollars: tax is usually ~40% or more of income so the extra goes a long way) - more money spent on stuff for the owners, less corporate tax to pay. Also, the corporate tax rate is actually less than the income tax rate I would otherwise be paying. Further, because the corporation owns all the assets, because the corporation is generating all the income [except wage], and so on, I personally pay very little in the way of tax. Which means more money for me, less for the government.
By the way, this is all totally legal (at least in western countries), so any objection that you have is a moral one, which is clearly not an issue if you're trying to make money.
Anyway, as the assets of the corporation grow (they will be very modest to start with, but after 10 or 20 years the expected accumulation will beat the pants off a home that you may or may not actually own), your personal income changes in its mix; you become less and less dependent on your wage - you can work less and less for money, and let your money work more and more for you. Indeed, some people who do really well at this dont have a wage-job, they just manage the assets of their corporation to the extent where they live off that expense account, and they dont get anything in the way of tax or whatever. Divorces are less messy as well, as technically you dont actually own anything (the corporation does). Means that, as a male, you might actually "win". (depressing, isnt it).
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