How the Trump Tax Law Created a Loophole That Lets Top Executives Net Millions by Slashing Their Own Salaries – By Robert Faturechi and Justin Elliott (ProPublica) / Aug 19 2021
The 2017 tax cuts made it more attractive for certain company owners to be paid in profits instead of wages. Some cut their own wages, expanding a loophole that was already costing the U.S. billions.
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In the months after President Donald Trump signed the Tax Cuts and Jobs Act in December 2017, some tax professionals grew giddy as they discovered opportunities for their clients inside a law that already slashed rates for corporations and wealthy individuals.
At a May 2018 conference of financial advisers, one wealth planner told the room that a key provision of the new law “leaves a gaping hole in the tax code.” As he put it, “The goal by the end of the presentation today is to make you guys the bus drivers, or the truck drivers, to drive right through that hole with your clients.”
Among the tax-saving opportunities offered by the law: Taxes on profits from certain types of businesses were cut dramatically, while the rate on salaries those businesses paid was reduced only slightly.
