So I incorporate a C corp to provide my services with, so I only pay 15% taxes on what my employer pays me. But in order to spend the other 85% I have to dividend it to myself. There I owe 15-20% more in taxes (Edit: unless I'm in the very lowest bracket) for a total of 28-32% (edit: recalculated realizing dividend rates are 20% at high brackets).<p>The author should double check that he's deep in the 35%/39% brackets or this makes no sense. The 15% corporate rate would be on every dollar of profit, just as the 15% dividend rate would be on every dollar of distribution, so effectively he's be paying 30% on nearly 100% of his income instead of 10% on first $9k, 15% on next $20K, 25% on next $50k, 28% on the next $100k, etc.<p>If you make $191k, you owe $46,500k in taxes (obviously ignoring deductions). That's total of 24%. If you make $416k, you owe $121k in taxes, or 29%.<p>And this ignores the fact that the IRS doesn't let you run a profitable corporation without paying a reasonable salary. Even if I can only pay myself half what my employer pays the corp, all of that paycheck is at normal income tax rates plus payroll taxes.<p>Lastly, note that this "scam" exists today. The federal C corp tax rate on first $50k in income is 15%. But obviously it's not worth it.