FACTS ABOUT S CORPORATIONS

The wingers are claiming that small businesses will be hurt by allowing the Bush tax cuts to lapse and I've heard some people say that if taxes are increased on the owners, they will have to lay off workers. For an S corporation, this is nonsense because the salaries and wages paid (line 8 ) by the corporation are SUBTRACTED from adjusted gross income. The owners income will be taxed at a higher rate but that doesn't affect the bottom line of the corporation. Here's the relevant section from Form 1120S.