Quote:
Originally Posted by Maestro
Not to say what he is doing is not great it is. However, Salary my be only one part of his compensation even as the owner. A friend of mine had his own business and took a small salary, because he also received a quarterly dividend which was the majority of his compensation. Remember a salary pays fed, SS, medicad, local and state taxes and if you are in the higher tax bracket, that is far more than the 15% for dividends for Feds and some state do not tax dividends.
Also he not doing these people much of service, they now think their skills are worth more and if they want to go somewhere else, no one will pay them that much.
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It doesn't sound like the company is public, but it is still possible for 'stock-holders' to get dividends of sorts from a private company...so it is definitely possible that is the case with this entrepreneur. Plus, as the owner, he has the option to sell his business at any point and make quite a bit of money.
He could be earning only '70k' via his official salary, but still be making a lot more though those dividends/returns.
It's for this same reason that Warren Buffett, despite being one of the world's wealthiest people, does not fall in the highest tax bracket:
http://www.forbes.com/sites/realspin...orkers-pay-21/