Creative ways of getting paid. Why don't companies do it?

It's not a secret that W2 income is taxed the most out of all other income types. Why don't companies use any of the following ways to get out of the payroll tax and keep our taxes and their expenses lower? 0. You get paid a small nominal salary, just barely enough to cover health insurance. 1. A bank that you work for opens a special savings account for you that pays 1000% interest on $20K principal ($200K). Interest is taxed as ordinary income, but there are no payroll taxes on it. Hence, you save appx $8K/year. 2. Alternatively, the said bank loans you $10M at no interest, and then you put it in muni bonds (tax-free income). When your employment ends, the bank takes the bonds back to pay off the loan. 3. A tech company doesn't pay you an annual bonus. Instead, they sell you a special share of stock for $1 and buy it back a year and a day later for $30K (or whatever your bonus is supposed to be). Now, your bonus is taxes as long-term capital gain instead of ordinary income. The same can be done with salary it you have enough savings to live on while waiting for a big payment. 4. You work remotely, and your employer rents your office room from you at whatever they would pay you in salary. Now, you buy some commercial real estate (or invest in a syndicated deal) and use depreciation from that investment to offset your "rental" income. Even if there is not enough depreciation, you still save on payroll taxes. 5. You work for a car dealership. They can pay you less than they normally would, but in exchange, you can take any car from the lot, drive it as you want, and change as often as you want. They cover gas, maintenance, and insurance. 6. You work for a high dividend paying company. They lend you enough stock for the dividends to be equal to your normal pay. Once you leave, they simply take that stock back. They may also gradually transfer the ownership to you, similar to RSUs. TC: 400K

Amazon don_pablo Nov 29, 2023

How did this guy reached tc of 400k ?

Amazon EQJW45 Nov 29, 2023

😂

LinkedIn tgvbh OP Nov 29, 2023

I agree. $400K is not enough

Meta bjorn29 Nov 29, 2023

I wanted to stop at 'pays 1000% interest on $20K principal' but gave OP the benefit of doubt and kept reading if there were good points. Don't make the same mistake I did

LinkedIn tgvbh OP Nov 29, 2023

Why? A bank can pay you whatever interest they want.

ServiceNow IKxL53 Nov 29, 2023

Thankfully, due to a hard-fought labor movement in the U.S., being an employee grants you certain rights. It's not just about how your income is taxed. It's about your right to family and medical leave, workplace safety, health and retirement benefits.

Palantir OpSHj13 Nov 29, 2023

At Palantir pre being public they tried to give an exotic financial instrument called Growth Units instead of options or RSUs. They started off like a normal option with a strike price that decreased by 10% ever year, and like an RSU would jot fully vest until we went public. So even with a stagnant FMV you would "gain" value. It turned out they were likely illegal with extraordinarly bad tax implications, so were never granted. Eventually they were replaced by RSUs, lucky for us.

LinkedIn tgvbh OP Nov 29, 2023

That's the opposite of what I propose. BTW, some high income employees are paid in tax efficient ways. Hedge fund or private equity managers get "carried interest" (special equity) from their companies, and that income is taxed at lower rates as long-term capital gains. Private equity companies pay bonuses to some of their employees in the form of preferred equity that pays high dividends. Prop trading firms do the same.