this is meant to be illustrative only. any resemblence to real figures or tax rates is purely accidental.
you are a small business owner selling widgets to the public in a retail shop. the store is open from 10 to 10, 6 days a week. you work every day. you have a part time employee who works 5 hours a day so you can do the banking, and whatever else a widget retailer has to do, which includes dinner with mom and the two kids. you helper makes $15 per hour counting everything. then you go back, finish off the day, and close up shop. after all expenses, state and local taxes, you are left with a take home of $125,000 subject to federal taxes of 20%. at the end of the year, you clear $100,000. which has been just enough to get by with everything you have going. you don't take vacations.
now the government raises your rate to 25%. that reduces your take home to $93,750. you have been buying health care out of the 100K and that reduction is just about one head worth. what do you do?
one possibility is to learn to suture and set broken bones, dropping one beneficiary. another is to cut your help by about an hour per day. or you can raise prices. lastly, you can advertise and increase sales.
you had been selling $500,000 worth of widgets per year at 20 bucks each, so each widget dropped about $5 in your pocket. 25,000 widgets. just to catch up you need to sell 5% more widgets, plus you need to at least cover the cost of advertising.
which is easiest and surest?
Having owned three small subchapter S corporations over a 50-year period, my solution would be to turn on the creative juices and come up with a new revenue stream to blend into my operation that would not increase overhead except the wholesale price of new product that would be added. A successful businessman could do this fairly easily. Or as some prefer: it'd be a piece of cake!
I founded and ran a small company for 21 years, before I retired recently, and ran another small business that I didn't found for another 5 years before that. Plus I have an MBA so I know what they say about this in B-school. My thoughts:
 Any of the posts here might be right depending on the circumstances. You simply don't have enough information to make any of these judgments. You need to know a LOT MORE about the type of product(s) being sold, nature of competition, description of workers employed, product development cycle, etc. etc. etc. These decisions are made everyday by a small business manager.
 The vast majority of small businesses don't pay any taxes directly; they are Sub S companies wherein the profit flows through to the owner, and the owner pays individual tax on it.
 Small businesses do not create viable jobs ... they provide them. Jobs, or the need for them, are created by demand, not availability of funds. So, if there is enough demand for another employee, will the hiring decision be affected by a tax rate that is 39% vs. 36% or whatever. No.
It was my signature that went on those payroll checks for 26 years. Sometimes I sleep well, and sometimes I didn't have the money at the start of the week ... always made it though. Everyone should have that experience and you would understand better. Like the military ... you don't really understand it until you've done it.
First, you were put out of business by a big-box retailer that went in down by the interstate 5 years ago.
Second, if you're clearing $100K/year and only taking one day off a week, you've got a pile of cash in the bank. A drop to $93K isn't going to make you drop your own health insurance. You'll drive your baby-Benz for 3 years instead of 2, is what you'll do.
First rule of do the math club is DO THE MATH.
and the big box retailer is having the widgets made in China by children and prisoners.
Their wholesale cost is $3 and they only pay their employees $8/hr
You wind up closing shop and working part time in the Widget dept of the big box retailer.
You lose your house to foreclosure. You get sick, and because you don't have health insurance you have to get a leg amputated.
MrWizard !! Your question is elementary. Taxes are a cost to be added to the price of your product. Also get aggressive with the accounting. Perhaps form a S corp.
Move home office and or production off shore.
What's your point?
We can go back to the days when business paid a 0% federal tax rate. That would sure boost business. Let's get rid of regulations too.
Now we're back to workers making 5 cents an hour. Back to tainted food products. Workers dying because there are no safety regulations.
No thank you robber baron.
A 0% tax is absurd, as is a 90% tax rate. It's all about balance.
Reminds me of sellers who will tell their listing realtor a price they wamt because its what they need, having no resemblance to the market price.
Or slobs who are sloppy w their labor cost and have slack to fire, or $$$holes who will stick it to employees and pushdown their stupid 3% on their employees.
You losers will run numbers w 3% against the entire 250k not just tge excess because you are idiots who cant understand marginal rates wout the help of some college educated accountant.
People who have unrealistic prices dont really want to sell, this is not a socialist country there is no price regulation on houses its called free market. -NO REAL LIFE EXPERIENCE
I guess sloppy with labor costs means paying people better than minimum wage?
In this example the govt is sticking it to the employees.
Or this business owner can go home and fire his gardener or housekeeper,
Either way the government is doing it .- NO REAL LIFE EXPERIENCE
It does not make a difference about the marginal tax rate. If I am taking home less money it has got to come from somewhere. Every extra dollar of taxes is a dollar not spent on payroll, or buying a good or a service that will stimulate the economy - you obviously dont take home a salary or have a household budget because you don't undertand it. - NO REAL LIFE EXPERIENCE.
you are a kid living in a book, go get a job , get married, have a couple of kids.
Don't worry, I know the answer.
but get ready, because the answer from someone with no real world experience is going to come, and it is going to read like it came from a business school textbook. It will also have undertones from the European Socialist Handbook.