[nightski]

I'm currently below that threshold. But I could choose to expand my business, maybe hire a few people and create some jobs and productive economic output. But if you are going to tax me heavily for that then no, I'll probably just stick to what I am doing and not bother.

[mcphage]

> But if you are going to tax me heavily for that then no, I'll probably just stick to what I am doing and not bother.

That’s fine. Since we have a free market economy, someone else who wants that money more than you will do it instead.

[scarface74]

I'm an experienced developer with a wide range of skills from web development to AWS architecture. When I looked at doing side work and thought about the rates people were willing to pay me and thought about the 49% marginal tax rate on every dollar I would have earned (Federal, state, social security, Medicare including the self employment tax - pre 2018), I thought "why bother?" My skillset isn't easily replaced.

On the other hand now that my marginal tax rate would be 33.6% (2018 Tax rates) since I'm already over the social security maximum from my primary job, it's much more attractive.

My wife would have jumped at the chance to make an extra work at $15 - $20 an hour (W2) when she was single, now at our combined tax rate, it's not even worth it. We are thinking about her working part time. The main reason she is working at all is for the health benefits that give me the opportunity to aggressively jump between contract, full time, unstable startups, and stable corporate jobs.

Taxes make a difference on how much someone is willing to work, especially if they make enough to be comfortable.

[nightski]

Free market economy does not mean everyone has the same money, connections, skills, and ability to produce the economic output.

[mcphage]

No, but that’s just a numbers of games—there are millions of developers out there, and only a few hundred high demand skills.

[mayniac]

I'm not entirely convinced by your line of thinking.

Firstly is your sole motivation for your business financial? Because if so you may as well sell it, buy property and let it out, you'll earn a comfortable living and if you use a letting agent you can get them to deal with the renters and do almost zero work, bar having to file taxes once a year (and hey you can get an accountant to do that for you). Even ignoring that, is your business something that actually generates a lot of profit or are the margins small? Whatever you're doing you could invest the time into an ICO and make millions. Point I'm getting at is that very few people start a business solely for financial reasons, there's usually some level of passion involved.

Secondly, why exactly would a high tax rate stop you expanding completely? You'll still be earning money, just less than before. And as the other commenter pointed out, someone else will step in if you don't, which could threaten your business.

[scarface74]

Point I'm getting at is that very few people start a business solely for financial reasons, there's usually some level of passion involved.

You really think that the average small business person working from themselves are doing it out of "passion" rather than that's their best alternative? Many small business owners work as much as possible to avoid having to pay someone else, hardly ever take vacations, and if given the choice, I'm sure would rather work in a nice comfortable white collar job if they could make the same amount of money.

[smilangalang]

Successful business starts with either tons of capital, experience, and power, or meaning/passion. He has a point. Middle brow MBAs and other business persons that you describe are not going to be making as much as you think for these reasons alone.