Yup - I was merely pointing out that there is not some massive tax arbitrage (pre-2017 and in the context of the data). For example: Let's say a firm has $5m i

Yup - I was merely pointing out that there is not some massive tax arbitrage (pre-2017 and in the context of the data). For example: Let's say a firm has $5m in net income before paying CEO salary, and let's say that the market rate for such a position is $1m/year, and the firm is 100% owned by the CEO. Let's say the company is in a high tax state (NYC? SF?). Now let's take two scenarios, one where the owner operator pays herself $150k in salary and the other where she pays herself $1m in salary. If the non salary income is taxed at ~45% and the salary income ~50% then her effective tax rate is 45.2% vs 46.0% for a ~$43k tax savings ($2.257m vs $2.300m in tax liability). This tax benefit is definitely going to lead people to want to characterize less income as salary, but in the grand scheme of things is not some wholesale tax doge as was previously implied...