1) Punitive taxation will result in layoffs and makes no sense if you're trying to revive the economy 2) Many small businesses want to be big someday. Whatever threshold you set at which "good" small business/startup morphs into evil megacorp, it will be arbitrary and result in a piling up of businesses near that line, staying at 199 employees (or whatever) to avoid the fist of the state. In other words, putting the brakes on the rapidly growing startup 3) Finally, any big biz worth it's salt can afford platoons of tax lawyers to set up LLCs and shell corps which each have 199 employees.