S-corps have an advantage in that they are less than 25 shareholders, and income is taxed just like it would be if you were a person, as opposed to the corporation (the s corp) paying tax, and each shareholder paying taxes on dividends. The s corp holds the advantage that the corp itself doesn't get taxed, but, each person that pulls money out of the corp pays at their individual rates.
In a C-corp, which is beyond 25 shareholders, the corporation is an entity that pays taxes on its income. Each person paid from the corporation also pays taxes on their respective income, but, of course, anything paid out by the C-corp is an expense on their books.
C-corps have a higher tax burden as I explained above. I'm not an accountant, but, that's the general jist of it.
S-corps allow you to pay taxes ONCE for each shareholder, as they take the money out of the S-corp. The S-corp itself isn't really subject to tax in that way. Hence, their attraction to small business. LLPs are kinda the same way, but, you'd need an accountant to explain the various nuances.
With regard to employment taxes, (FICA, Medicare) up until the passage of the new health care bill, unearned income has not been taxed. Perhaps you've heard Warren Buffet talk about it. Warren makes mostly unearned income. That is, he doesn't work a job. It's unearned. That income has NEVER been subject to FICA/medicare/employment taxes prior to the passage of the new bill. It's only fair that all income should be subject to tax for the sake of FICA/Medicare, and that is changing soon. Up this point folks with unearned income rode for free. That's changing.
With regard to the law change, I don't agree with it, as I HAVE a S-corp. The neat thing about a S-corp is that, in some ways, it works as a savings account in that the equity you build, unless you take it out, goes untaxed. I.e. S-corp is pass thru and is NOT subject to corporate income tax.
Seems like there's always a loop hole, and this law is trying to change it.
In my case, we don't use our S-corp. It's still cheaper to do a 1040 long form, since I work from home, and so on.