Have you read about the billionaire who pays a lower income tax rate than his secretary and gives advice for how much income tax other people ought to pay? You might want to ask: “How does he do it? ”

We don’t know the complete answer to that question. No doubt, only his army of tax advisers does. What we’d instead like to share are 10 ways the current tax code allows the rich to accumulate vast fortunes, subject to little or no tax. And, unlike the offshore account tax fraud that gets so much press and regulatory attention, many of the most egregious tax avoidance scams are perfectly legal.

1. No income means no tax. Imagine two men living in the same town. Joe owns an oil exploration corporation. Pete, a geologist, works for Joe. Pete finds oil, billions of dollars worth, and when he does, Joe gives him a $1 million bonus.

Pete pays income taxes on $1 million and keeps looking for oil. Joe, the boss is now a billionaire. Although he has not sold any oil yet, the bank lends him money against the find and he builds a mansion, buys a nice car and lives it up. Even though Joe has become richer by billions of dollars, he pays no income tax. Why? He has no income.

This simple example illustrates an important point: The biggest income tax loophole is the definition of income. For most people, what counts as income is simple to see—it’s their salary, and maybe, if they’re lucky, a bonus. Yet for the very wealthy, salary is trivial—if they earn one at all. That’s not where their riches come from. Instead, their money comes from “carried interest” (which we’ll explain more fully below) and from the appreciation of their ownership interests in stock, real estate and other assets. Every year, Forbes and other magazines show how the wealth of hundreds of individuals increases by hundreds of millions from one year to the next. As long as this increase is not defined as income, no income tax is due.

And, surprise, surprise: all these things are effectively taxed, if at all, at a much lower rate than the income tax rates that apply to simple salaries and bonuses. It gets even better: increases in the value of shares of stock, and of real estate, aren’t taxed until sold and if never sold, may never be taxed. What about estate tax, you say? After all, it used to be said, “The only things that are certain are death, and taxes.” But now, with good ”advice,” that’s no longer true. Stick with us and we’ll explain how.

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