If we should be able to "allocate payroll expenses the way we see fit", then I'm going to "allocate" 100% of my taxes back to my bank account. Funny how that works!<p>You've missed half the issue. These aren't people taking a $10,000 salary so they can grow their business. They're taking a $10,000 salary and a $80,000 distribution (self-employment tax is capped) and paying taxes only on the $10,000.