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Deleted member 4644
Every conservative I know claims that "small businesses are pass-though tax entities" and "increasing income taxes on income over $250K" will ruin small business in America. They primarily claim that small business won't have the cash to hire more workers.
Isnt it true that a worker's wage is an expense? Therefore, if you hire another worker, your business's (net profits) tax basis goes down because you have added an expense?
So let's say you have a profit of 250K. You add a worker that costs 50K a year. Now your profit is 200K.
But let's say the worker adds 100K of profit. So now your profit is back up to 300K. You are taxed on 300K (at the various marginal rates staggered up to that amount). But you are not taxed at 350K, because that worker is a 50K expense.
So taxes should not stop a person from adding workers... or am I missing something?
Isnt it true that a worker's wage is an expense? Therefore, if you hire another worker, your business's (net profits) tax basis goes down because you have added an expense?
So let's say you have a profit of 250K. You add a worker that costs 50K a year. Now your profit is 200K.
But let's say the worker adds 100K of profit. So now your profit is back up to 300K. You are taxed on 300K (at the various marginal rates staggered up to that amount). But you are not taxed at 350K, because that worker is a 50K expense.
So taxes should not stop a person from adding workers... or am I missing something?