The problem is that most corporate shareholders and officers take their earnings as capital gains ;

Quote:

IRS 7. The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income.

For 2010, the maximum capital gains rate for most people is 15%. Furthermore, capital gains are non-wage income and not subject to Social Security, Medicare, Workman's Compensation Insurance costs, state and federal unemployment taxes) pay much less in in taxes than the 99% pay on wage earnings.

Also, the Social Security taxes are limited to the first $106,800.00 of wage earnings.

All of this is perfectly legal and that is the problem -- doing business as a corporation is encouraged by the tax laws.

@robbie -- almost everyone has lost 30% or more in "paper equity" in their real estate interests. Leverage can be both your friend and your worst nightmare ... You sailed into the "perfect storm."