Respectfully: it's also unethical, if you think about it carefully. Pay full freight on your payroll taxes: if you make so much much money that this dodge is material to you, you're the last person who should have a loophole to take advantage of.
Still, I totally agree that it's unethical.
Ha! "But foobar22 on the internets said it'd be okay if I claimed X as a deduction? Why am I being auditing?!"
There should be a global disclaimer when you sign up for an HN account that tells you to listen to your lawyer, your doctor, your accountant ...
Regarding your first paragraph, I'd agree that "claiming a low income" is a bad idea, and not just because it's illegal. Regarding the audit business, my accountant seems pretty confident that a straightforward tax return without too much any weirdness (real estate, huge equipment costs, etc.) is fairly safe from auditing, if I'm paid a salary that a software developer in my position might expect to make.
Regarding your second, more important paragraph: I'm pretty sure I disagree about it being unethical. I think the tax code is depressingly regressive, and I'd legitimately feel like I'd shirked a duty if I just ducked out on money I should have paid. I believe in the power of government, and having the money to back it up is important.
That said, the government decides what's taxable, and which actions should be incentivized. There are plenty of breaks that I probably "shouldn't have": Why do I get to pay less tax because I own a home, or because I got married? Why, as a "small business owner," can I deduct the cost of my insurance premiums, but employees can't? It seems silly, but I'm certainly not going to file at the single rate instead of the married one.
There are years and years of precedent about S-corporations paying shareholder-employees;[0] the "reasonable" salary bit comes up every time. The mental model I've been using has been: How much of this money am I making because I'm a developer, and how much is here because I run my own business? If my annual salary would be, say, $110,000 as a W-2 employee at some big company, but as a contractor I can bill $180,000 a year, I'd say the business grossed $70,000 farming out the work of a $110,000 programmer. To a certain kind of shop, working as a contractor is a valuable service: Companies don't have to go through the hassle of dealing with an employee, only a purchase order. Still, SOMEBODY has to deal with that hassle: Now, though, it's me.
[0] https://www.irs.gov/businesses/small-businesses-self-employe...
As you can imagine, there is a ton of bookkeeping and bureaucratic pain associated with having an S-corp (like pretending to have annual meetings, and having to write minutes for them).
I don't think this is true. If you buy an ice sculpture for the office lobby, it's totally tax deductible (it's a business expense), but you can use money for whatever you want if you take it out of the bank as a "distribution" instead of a "paycheck." In that situation, you still pay income tax on the money, but not the other taxes.
So I think the trick here is, you pay yourself $70k in salary, but issue yourself a $30k profit sharing distribution.