Michigan Democratic Senate nominee Abdul El-Sayed says that, if elected, he will work to “build a tax system that’s fair for working people and makes billionaires pay their fair share.” Yet his latest financial disclosure and tax return suggest the wealthy candidate, who is in the top 1 percent of Michigan earners, is taking advantage of an obscure tax loophole—derided since then-Democratic vice presidential hopeful John Edwards used it in 2004—in order to lower his own tax burden, accountants told the Washington Free Beacon.
El-Sayed’s latest financial disclosure, which covers all of 2025 and the first seven months of 2026, shows that he paid himself a “salary” of $64,000 through AME Higher LLC, an entity he founded to take in consulting and speaking fees. He earned nearly double that—$103,000—as a “member draw,” company profits that go to El-Sayed as the business owner.
The compensation structure is commonly used to limit Social Security and Medicare tax burdens. If El-Sayed were to pay himself a $167,000 salary, he would owe a 15.3 percent self-employment payroll tax on it, 12.4 percent of which goes to Social Security and 2.9 percent of which goes to Medicare. LLCs classified as “S-corporations,” however, can avoid some of the tax. The IRS requires the S-corporation owner to pay himself a “reasonable salary” reflecting a legitimate market rate. That money is subject to payroll taxes, but the remaining profits are not. The setup would allow El-Sayed to save thousands of dollars in payroll taxes.
“The split between the compensation and the distribution may have been done with an eye towards tax havens,” Robert Willens, a tax and accounting adviser to Wall Street hedge funds, told the Free Beacon. “This is a loophole actually that was attempted to be closed several times. … Obama first tried to close the loophole and was unsuccessful.”
“Still a very viable strategy,” Willens said.
A second accountant, who requested anonymity out of fear of reprisal, said if El-Sayed’s company was not taxed as an S-corporation, he “wouldn’t take the income out” in the way he reported on the disclosure. “If you elect, as an LLC, to be an S-corp, then you could take out a salary,” the accountant said. “So if it’s an LLC, and he checked the box that says you’re going to operate as an S-corp, that’s probably the only thing that would make sense.”
El-Sayed, whose campaign did not respond to a request for comment, would not be the first politician to take advantage of an S-corporation while criticizing his opponents as beholden to the wealthy.
During the 2004 presidential campaign, Edwards faced criticism from the New York Times for creating a “tax shelter, a so-called S Corporation,” to lower the taxes he owed on income stemming from jury verdicts and settlements he won as a trial lawyer. The Times noted that Edwards “attacked President Bush as favoring the wealthy with his tax policies and blamed tax shelters as undermining the Medicare program.” A campaign spokesman said Edwards “believes that no individual should pay more than they owe in taxes, but he also believes that we should make sure our tax code reflects our values. The law should make sure everybody is paying their share—not one penny more and not one penny less.”
Years later, in 2012, former House speaker Newt Gingrich faced criticism for a similar arrangement during his presidential run. That arrangement saw him earning $444,327 in salary from his two firms and $2.4 million in profit payments, as revealed when Gingrich released his tax returns. USA Today called the move “a popular tax strategy” involving “a so-called S Corporation, an entity that has increasingly been used by attorneys, entrepreneurs, contractors and self-employed professionals” to avoid “business taxes.” Gingrich, unlike El-Sayed and Edwards, campaigned on a flat national tax rate and on privatizing parts of Social Security and Medicare.
The S-corporation tax structure has thus become known as the “Gingrich-Edwards tax loophole,” CNBC reported in 2014. Then-president Barack Obama called to end it in his 2015 budget, though he did not succeed, and his vice president, Joe Biden, went on to route “book and speech income through S corporations … substantially lowering his tax bill,” the Wall Street Journal reported. Biden used a corporation, rather than an LLC, to collect his income, but LLCs like El-Sayed’s can also be taxed as S-corporations.
Senate Democrats have also taken aim at the “loophole.” In 2023, Sen. Sheldon Whitehouse (D., R.I.) proposed a bill, the Medicare and Social Security Fair Share Act, targeting “the owners of pass-through businesses” who Whitehouse said “can avoid Medicare taxes … by disguising earned income as distributed business profits.” The bill, which Whitehouse reintroduced in 2025, levies a tax on “pass-through business income” for those making more than $400,000 annually. Sen. Ron Wyden (D., Ore.) also proposed a 2025 bill targeting “pass-through entities” that “avoid paying their fair share of taxes.”
“Right now, wealthy owners of pass-through businesses like hedge funds and private equity firms can avoid paying Medicare taxes entirely,” Whitehouse said in a March 2026 Senate Budget Committee statement. “My bill would close that loophole.” Whitehouse’s office did not respond to a request for comment.
It’s impossible to know whether El-Sayed’s consulting firm is taxed as an S-corporation without seeing his full tax returns, which he has refused to release. Instead, El-Sayed released two pages of his 2025 return on July 15, omitting his Schedule 1 and Schedule E forms, which would list S-corporation income.
The partial release does, however, provide some evidence of the structure. It lists $130,749 in W-2 wages, a figure that broadly aligns with the $146,749 El-Sayed reported in “salary” income in his financial disclosure. Of that money, $82,749 came from Wayne County, Mich., where El-Sayed worked as health director until April 2025. The rest, $64,000, came from El-Sayed’s consulting firm. Additional income reported on the disclosure—like speaking fees, consulting fees, book royalties, and income from El-Sayed’s three rental properties—would not be paid in the form of W-2 wages.
El-Sayed’s W-2 income is significant because the owner of an LLC taxed as an S-corporation can pay himself a W-2 salary; the owner of an LLC taxed more traditionally generally cannot, a third accountant explained in an interview with the Free Beacon. Assuming El-Sayed’s financial disclosure is accurate, it would indicate that he classified his LLC as an S-corporation and is thus permitted to pay himself W-2 wages.
The arrangement would stand in stark contrast to El-Sayed’s rhetoric on the campaign trail.
The left-wing Democrat has repeatedly argued that the wealthy “should pay their fair share.” He also says he “oppose[s] corporate tax breaks” and has criticized President Donald Trump’s tax policies, saying, “I believe in right-sizing our tax code to take on the outsized power of excess wealth in our economy and democracy.”
“The ultrawealthy should no longer be able to hide behind loopholes that leave them paying lower tax rates than the rest of us,” El-Sayed’s website states. “Toward that end, I support taxing capital gains over $1 million at the same rate as ordinary income and closing the stepped-up basis loophole. … I’ll also fight to close the Social Security payroll tax cap to make sure the rich pay their fair share so that Social Security stays solvent well into the future.” While El-Sayed’s tax returns do not reflect capital gains over $1 million, his 2025 income exceeded $686,000, placing him in the top 1 percent of Michigan earners.
El-Sayed has campaigned as a crusader for the working class but has amassed significant wealth since running unsuccessfully for governor in 2018. His partial return shows $686,069 in total income, placing him in the top 1 percent of Michigan earners. Some of the money came from his psychiatrist wife Sarah Jukaku’s private practice, which does not accept Medicare, though El-Sayed is a proponent of Medicare for All, the Free Beacon reported. El-Sayed also owns three rental properties, including two abroad: one in Bangalore, India, and one in Dubai, which appears to be nestled within a “resort-style” luxury community.
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