They pass through their income to the owners of the S Corp, who pay personal federal taxes.
That way, the owners of the S Corp can pay taxes using their own deductions, which may result in a tax bill lower than the prevailing corporate tax rate.
As the CFO of a small S-Corp that employs 4 people and in 20 years has paid over $1 million in taxes, I can assure you that S-Corps, via their owners’ withholding, pay plenty of taxes.
This is actionable on the part of the Kochs. He’s accusing them of felonies, and this has gone too far.