Ultimately, VCs are paying for your fancy apartment. They're just paying more the more expensive your personal life is. I wouldn't dismiss the obviously aligned incentives here that encourage minimization of capital expenditure for business entities, especially in the USA.

I'm making no moral or legal judgements, just commenting based on what I've encountered and witnessed. I'm not a founder and never consulted anybody with legal qualifications regarding this matter either in any specific instance. But, in my anecdotal experience, there is a rather broad spectrum of contexts and interpretations on how to do what's best for you and the business in your specific situation. On the flip side, it's not a big conspiracy, in the USA we heavily subsidize the pursuit of new enterprise. And the law reflects that. Smart people and successful businesses minimize their tax liability.

I don't understand your point. Of course at the end of the day VCs are paying for everything in the sense that they funded you, but there's a clear distinction between personal expenses (which come out of your salary) and business expenses (which you charge your business CC on).

Of course you wouldn't have fancy VC dinner on your personal dime but if you're meeting VCs to raise a round, talking to a potential customer, etc., those are legitimate business expenses.

No VC is going to be paying for your rent or your car lease, which is what you implied above. That's patently false.

You say it’s patently false and yet here I am saying I’ve seen startups own houses and cars. Maybe your and their tax accountants would disagree, but that’s a different topic.

My point is simply that the low founder salaries are not because the founders are being particularly frugal or living humbly. The low salaries exist simply to pay for the things that the business’ accountant can’t expense. In every respect, the founder lives their business.