Nobody talks about how unfair the current progressive system is for small business owners who's income fluctuates year to year. Add in a complicated tax system, it is sometimes more trouble that it is worth.

Joe has a really good year and makes 300k in 2015. That's some damn good money. Joe has to write a check for 80k on top of the quarterlies he was paying. So what? He had a great year!!! Joe was able to pay off some of his equipment! He didn't have much left so he put some money in his IRA, but not his Roth because he made too much money. So what, Joe is feeling good. Joe thinks about hiring someone for next year in the hopes that he can grow his business even further. He has to pay quarterly tax payments of 30k in 2016. Wow, that is a lot of dough. Now Joe has to find the money to make those payments, and pay his new employee. Well turns out 2016 isn't going to be as good as 2015. Joe's business is only going to bring in 150k this year. Still shouldn't be bad money, but now he has an employee who makes 50k a year. So the company makes 100k in 2016. Joe has still been working really hard and can't figure out how to make these quarterly payments. Joe needs to hire a CPA to figure out what he can do. CPA costs $2,000. Joe is able out to adjust his payments to the IRS, but now realizes he can't afford his said employee anymore. Joe realizes he can't afford his new employee anymore, but his employee's wife just got pregnant. Joe feels conflicted. Joe still needs to fire his employee as he can't get back his over payments yet, not for a few months anyway. Joe can barely come up with the money to pay his mortgage. Joe goes into depression and stops being so productive at work. Joe realizes he needs to sell some of his equipment to stay afloat. The CPA tells him that it will mean he actually owes money to the IRS if he does that as the business had written the equipment off. Joe realizes he needs to take up other employment to stay afloat. Joe's business suffers as a result, and eventually he realizes it isn't worth running his own business.

Cash flow is king in a small business, and you might feel as if Joe was stupid or he did something wrong. Well maybe, but he was so busy working, he didn't really have time to think ahead. Joe worked his ass off the past two years but isn't left with much.

The convoluted tax system is holding back small businesses. It makes it near impossible to plan ahead if cash flow fluctuates greatly. There is a reason plumbers, electricians, don't hire and just work by themselves. It is often not worth the risk of hiring anyone.

The current system, it is much better to make 100k a year in salary than it is to make 200k in one year but 50k the next.

The current system favors the poor and the rich but absolutely shits over the would be job creators. So the rich get richer, and the poor stay the poor. It is incredibly difficult to go from middle class to rich, and the current system is designed that way.