Allowing tax cuts to expire for those over 250K will increase jobs. [View All]

[Bonhomme Richard]

I am talking about those small businesses that are S Corporations and we are also talking about small S Corp. businesses that are making profits. If the company isn't profitable all of this is moot because the owner shouldn't be paying themselves over 250K.
The way I see it if the marginal income tax increases for the owner of a S Corp they have two options.
1. Do nothing and suck it up.
2. Decrease your taxable income.
Number two is the direction most would take. They are going to put the maximum into retirement funds they are allowed and they will decrease the company profit by putting money back into the company. That would include buying assets (new machines, real estate, etc.) or taking the chance on a new employee. Either way they get to write it off as a company expenditure. Wherever they put the money it will stimulate the economy and maybe create jobs for new machine manufacturers, etc.
The bottom line is you want to decrease your taxable income and to do that you need to increase company expenses. At the end of the day the owner knows that increasing assets increases the value of the company and when time comes to sell they will see a deffered return because of those assets.
The logic, to me, seems to point to an increased stimulus if the lower tax rates are allowed to expire.