[roflmao123]

> Post Section 174, the profit is now $160,000 each year. Now they pay taxes on $160,000, even though they literally have no money left over because revenues equaled expenditures.

They have the $200k they pulled from their startup, far more than what most people earn. If you make enough to pay yourself $100k then you make enough to pay taxes.

[runeks]

The amounts are irrelevant. It would be the exact same situation if all amounts were divided by e.g. 10: paying taxes on non-existent profits.

[ccleve]

They do pay taxes. They each pay personal income tax on their $100k.

[roflmao123]

Still plenty left to pay their business taxes.

[maaaaattttt]

And if it’s employees? Do you ask them to contribute to the company’s taxes as well? After they’ve paid their own?

[roflmao123]

You pay them less money so you can afford your taxes, like literally everyone else.

[spwa4]

... or you never have the startup, and just have 2 people unemployed and no produce nothing of use to anyone.

Which is what's happening.

[roflmao123]

If you can't afford your taxes your business model was flawed to begin with. In the above example there is more than enough money for it to still be worth doing.

[dyauspitr]

So on the $200,000 it’s reasonable to you that they have to pay $120,000 ($80k income+$40k business) in taxes?

[roflmao123]

Two people earning $100k each would pay $28k income taxes each, totaling $56k. Where did this $80k come from?

[dyauspitr]

What about state and city taxes? 80k might be a tad too high but in NYC on $100k, you would only take home around $65k.

[jameshart]

The company doesn’t have any money to pay those taxes with.

If you give the company more money to use to cover its tax bill, then that further increases the company’s taxable income.

[roflmao123]

Pay less salary so you can pay your taxes? This isn't as complicated as y'all seem to want to make it.

[zmgsabst]

That’s what makes them less competitive: they have to lower pay because they don’t have the cash on hand and revenue to amortize the deductions.

[throttlebody]

If you employ people on straight salaries, you are stuck. Not everyone is on share gravy train