If you start firing workers, then service to clients/customers will fall and that will lead to a downward spiral. What happens is that margins are reduced, so either you need to run a more efficient business or figure out how to increase revenue through creative marketing.
I would get his point if taxes were very high, but a 30-40% tax rate on the highest income earners is pretty fair.
disclaimer: i am not a small business owner, never have been. no temperment for it. but i do understand the economics. ask Doc. i called his office and chair time rates about 6 months ago.
the point is not high tax rates or low tax rates. it is the change in tax rates that matters. the hypothetical SBO had a fairly stable life. not rich by the Dem definition, not poor by the Rep definition. now you force a change on him. why does anybody not expect him to respond to the change in some fashion? why does anybody not expect him to take the easiest way out?
if you do nothing to his tax rates, nothing changes. if you reduce his tax rates, maybe, just maybe, he will give his helper another hour per day, so he can spend some more time with the family. maybe even spend the windfall on widget advertising, allowing him to hire another part time helper to handle the increased business. if you increase his tax rates, he will look for a way out of his increaed expenses.
For HGFFwhatever. i have worked for a lot of corporations over the years. taxes never, ever, came out of earnings. they were a cost. might have been added at the corporate level as a cost of doing business. but they are costs.