They'd also likely pay the corporate tax rate in that case, which is 21%. Tack on 20% for the highest cap gains bracket, and you're at 41% federal unless you can work your way out of it with some loophole (e.g. carried losses on the cap gains side, idk what on the corporate side). FICA caps at something like $150k, so they'd actually be paying more than the highest income bracket of 37%.

The really smart move (or evil move, depending how you see it) would have been to start the business within a Roth IRA. Then you'd just pay the 21% corporate tax rate.