[quote=SK in CV][quote=AN]dumbrenter, to make it clear, my friends aren’t blaming anyone. You’re making an assumption and it’s completely wrong. I actually didn’t ask for their opinion. I just look at their actions over the last 4 years and extrapolate what would happen if their net income decrease further. When demand start decreasing a few years ago, they didn’t do anything, hoping their demand will come back. When it didn’t and it start to affect their net take home, they start to reduce their employee’s time. So, based on their action then, I would extrapolate that if their net income decrease due to higher taxes, they would decrease their employee’s time, so that their net take home would maintain at the same level. This is also common sense to me, because I would do the exactly the same thing. If you can offload the cost to someone else, you would. The employees will always get hit first before the employer. These businesses area already running at bare minimum and there’s no fat left to cut. These business owners have expenses to pay (life expenses), which they rather not cut. They can easily offset the increase taxes by cutting the cost of paying their employee and have the spouse who are currently working part time to work full time. Their net pay would maintain at similar level. This is also inline with what I was saying that during good times when demands are increasing, they would gladly take less growth due to higher taxes. However, during bad time, they will squeeze everyone else first before they squeeze themselves.[/quote]
The bolded part. If they’re already running at the bare miniumum, how can they cut if tax rates go up? I’m guessing this example really doesn’t apply since this business isn’t making anywhere near $250K a year.
AN, I spent the first 20+ years of my career with small business consulting being a big part of my practice. I worked with them on increasing profits, cost cutting, and saving taxes. Never once was I involved in a decision making process where there was such a thing as a “target profit”, where the owner would consider cutting employees in order to hit that target. We did operational projections and budgets, and taxes were a by-product, not a driver until after the projections were complete.[/quote]
Ditto what SK said. I’ve also worked for a number of small and medium-sized businesses. Like SK, I have never heard anyone say that they had a “target profit.” Additionally, nobody ever said they were going to shrink the business/shrink capacity because of taxes.
