I'm confused. Do you mean to say people are taxed on their gross or their net? If you make 250 thousand in your business, but after you pay $200K expenses only 50 thousand is left for you, you pay taxes on the 50 thousand, right? But if you hire new employees, that comes out of your business expenses, or a business loan, not the salary you pay yourself. Businesses finance expansion by borrowing, not out of their paychecks, and the payments and interest on the loan are deducted as an expense. Am I missing something?

I simply don't see how making more money can be bad. Sure, it can push you into a higher bracket, and maybe the fraction of taxes goes up relative to the take-home, but you still make more.

I have a small business, and after I deduct my expenses, the remainder is added to my other income and I pay taxes on that. It may all be taxed at a higher bracket because I'm making more, but I still take home more.

Other than the fact nobody likes to pay taxes, what's the problem?