Quote:
Originally Posted by aklim
What is it you MEANT to say then? Please break it into small words since I obviously am misunderstanding. You said "If the owner is basing his hiring decisions on how much aftertax money he posseses....". What should I interpret from it? The way I see it, you think it is clear cut. Either you base your hiring on how much aftertax money or you don't. I am saying that you are correct that such person is a moron if that is ALL he bases the decision on. Are you saying that the aftertax money will never enter the picture AS A FACTOR, not the "dealbreaker"? Note, I agree with you that it probably will not be the dealbreaker. What I am saying is that you feel it is NOT going to be a factor and I am saying that it could be a FACTOR.
How so?
It is an example of how the hospital trims it's staff and still can not get itself into problems. Of course, unless you believe this move the hospital made and the fact that they lost a major contract and had a hiring freeze is purely coincidence. How does it apply to a small business? Like I said, what if I decided that instead of hiring someone else to replace this guy I am firing or quit, I decide to spread the load to others and myself so I can take home a few bucks more?
|
With regard to a small business, we've got to determine where the salary for the new employee will come from. In an S corp., it must come from the pretax income of the owner. So, yes, in this scenario, the owner must have sufficient income to pay for the cost of that employee. However, since all of our discussions have be regarding taxable income of above $250K and the additional tax paid under the new plan is roughly $7.5K for a $400K income, I don't see how you can make any case that the owner will need to defer hiring due to the loss of $7.5K of income.
In fact, for those near the $250K line, you might even make the case that the small business owner will have an incentive to hire because it will drop his marginal rate from 39.5% to 36%. It's quite possible for the opposite effect to occur.
I don't see how it could possibly be a negative factor in the income brackets we're discussing ($250K and above).