Comment by scarby2

20 hours ago

> This defers taxes and allows the funds to be reinvested without tax.

All business funds are re-invested without tax, this is actually a good thing. Also for the majority of business owners taking a loan against your assets to pay yourself is a terrible idea, yes it may defer taxation but that tax will still come due and now you have to pay interest.

> Someone who owns their own business could also easily drop their salary significantly for the year prior to applying to college.

This could be a problem but i think the amount of difference this would make would be negligible - most people don't plan like this. You could also emancipate your 17 year old or have them live independently for a period of time (my friend actually deferred his entry and worked for a year in order to get a full ride)

> most people don’t plan like this.

This is a pretty naive take. It is a $85k per year cost. If you can shift some money around and avoid $85k per year, you would absolutely do that.

> you could also emancipate your 17 year old.

This is complicated. Emancipation is not a “sign a form” kind of thing. The kid would have to be living completely independently (no support from the parents) and would have to convince a judge that they need to have rights and responsibilities otherwise given to adults. “Because the parents don’t want to pay for school” isn’t really a valid reason.

> All business funds are re-invested without tax, this is actually a good thing.

Paying tax and investing in your kid is also a good thing. Putting your income into the S&P 500 is also a good thing, but being wealthy enough to do so should exempt your children from this subsidy