Does Obama know the definition of "small business?"

I have no idea why Obama didn't nail McCain in the debate, with that stupid "Joe the plumber" thing. As Biden rightfully noted, 99.9% plumbers in this country make less than $250k even if they run their own plumbing outfit (which most do anyway).

Medium plumber pay range is $47k.

reply to post by buddhasystem


I thought the whole deal with the plumber was that he was planning to buy the business he works at now, and that under Obama's tax plan, if he did buy the business, his taxes would go up significantly as a small business owner....thus, hindering his chances at success because he then would not be able to afford as many employees, insurance, expansion, etc.

And, then the now infamous "spread the wealth" comments.

I thought that was the whole deal with "Joe the Plumber".

Originally posted by TKainZero

Originally posted by semperfortis
Simple..

Obama's tax plan will increase taxes on business with gross profits in excess of 250K..

So its only on profit?

Would this law not then give incentive for Small business to lie/cheat/steal to get under the limit of 250K profit...

Say a small buisnes made 300k... couldnt the business owner just give himself or another family member a rasie, and lower his profit under the threshhold...

Wont this create more and more problems???

Go tp his website its not gross profits its gross income very different. That means before you count payroll building rent equipment etc. Most small business do indeed report 250000.00 in income on there taxes.If they didnt wouldnt be in business very long. This is wealth distribution which plays well to poor people. We get to stick it to the man. This attitude of his was fostered by living in chicago and listening to those people there that are so oppressed by society.

But reality is anybody can open up a small business just takes time and determination. But if you take away the reason for doing this which is to make more money small businesses will close which is bad because according to 2006 estimates 49 percent of jobs (not agiculture) are with a small business.

Originally posted by skeptic1
I thought that was the whole deal with "Joe the Plumber".

With this 24 hour news cycle, I've heard enough about "Joe the Plumber" for a lifetime.

Joe the Plumber

I guess it's no wonder John McCain was so happy to use "Joe the Plumber" as a debate prop last night -- he's a partisan Republican who also happens to be a member of McCain's old friends, the Keating family.

What happened to that thread?

Originally posted by buddhasystem
I have no idea why Obama didn't nail McCain in the debate, with that stupid "Joe the plumber" thing. As Biden rightfully noted, 99.9% plumbers in this country make less than $250k even if they run their own plumbing outfit (which most do anyway).

Medium plumber pay range is $47k.

Biden's statement was a deflection it was not what Joe asked him you can see it if you like its all over the news. Joe explained he works for a company and would like to buy the business and has been saving to do so. But was concerned because he knows the business makes over 250000.00 so he was saying he was worried about trying to start a plumbing company. You know what Obama's response was that if his plan was in place he would have saved money in taxes until he purchased the business that's all most laughable. Id rather pay taxes on 47000.00 the 250000.00. Now Biden's statement was just stupid yes most plumbers wages are below 250000.00 but not most plumbing companies which is where most plumbers work. Pull open your local yellow pages and look at plumbers very few are just 1 guy working out of the back of a truck check your facts.

Does someone have a resource they can point to that shows the tax program differences like in the cnn. com table -

money.cnn.com...

But with the current tax rates added ? I'm doing my best to understand the argument about thinking it's better making 47K a year than having a successfull business that earns gross income of $250K under the Obama tax plan.

reply to post by buddhasystem


That 47k isn't going to mean squat once those plumbers have to start paying their fair share of the corporate tax Obama plans to increase. But the again your probably one of those who believe that corporations really do pay their corporate taxes out of their own money. When you start to see prices increasing under an Obama term, just remember that Obama is merely spreading the wealth.

PS.... with all the gaffes Biden has made of late, is this figure he quotes really reliable.

[edit on 16-10-2008 by jam321]

Originally posted by dragonridrNow Biden's statement was just stupid yes most plumbers wages are below 250000.00 but not most plumbing companies which is where most plumbers work. Pull open your local yellow pages and look at plumbers very few are just 1 guy working out of the back of a truck check your facts.

If most plumbing companies actually made more than $250,000, we wouldn't be in the economic mess we're currently in. Sure, the company Joe wants to buy may actually have a lot more than $250k in receivables, but after payroll and operational expenses, what's left? If it's more than $250k, I'd wager that Joe's going to have to save a lot longer, and if he doesn't, he shouldn't be too concerned about an arguably minuscule tax increase.

Essentially, the McCain campaign has simply created this "example" of hurting the little guy and his small business out of thin air. For all the attention he's gotten, Joe the plumber is irrelevant. Check your facts.

Originally posted by Unit541
My understanding is that the 250k mark is NET, not GROSS. to be determined AFTER business expenses. And the 42k/year tax increase is a myth perpetuated by the McCain campaign. There's a lot of misinformation in this thread that I didn't expect to see, especially since there's been so much fact checking going on lately.

For example, lets say I do have 25 employees, and paying them each 30k a year. That's 750k a year just in payroll, that my company would have to earn just to pay my employees. I think for a company of that size, another 250k is reasonable amount of business related expenses. That puts my companies earnings at a cool million. However, I haven't made any money yet, and I'm STILL 250k away from the tax increase, under obama's plan. So, my company, with 25 employees, in this example would need to earn 1.25 million to even get close to a tax increase.

More people need to be starring this post. I don't think a lot of you understand the concept of earnings. If I receive 10$, but I had to spend 9$ to get the $10, I've only earned 1$ ? ... You would think this would be simpler to the intelligent folks here at ATS.

Your earnings must reach 250k for you to have a tax increase.

I must say this is blowing my mind.

How can anyone that owns a business not understand they are taxed on their profit and not their revenue?

It is beyond irresponsible to be a business owner and not even have the slightest clue how your business is being taxed, but apparently this is not at all uncommon judging by some of the business owners I have encountered the last couple days. Obama has not clarified this point because he assumed (apparently falsely) that small business owners were not ignorant of this most basic principles of our tax system.

Look I hate both of these candidates, but it is absolutely clear Obama's tax plan is better for the vast majority of American's - I am flabbergasted that that is not clear to everyone. If you or your company is profiting over 250K a year I'm sorry you can afford to be taxed higher.

Originally posted by proximo
I must say this is blowing my mind.

How can anyone that owns a business not understand they are taxed on their profit and not their revenue?

It is beyond irresponsible to be a business owner and not even have the slightest clue how your business is being taxed, but apparently this is not at all uncommon judging by some of the business owners I have encountered the last couple days. Obama has not clarified this point because he assumed (apparently falsely) that small business owners were not ignorant of this most basic principles of our tax system.

Look I hate both of these candidates, but it is absolutely clear Obama's tax plan is better for the vast majority of American's - I am flabbergasted that that is not clear to everyone. If you or your company is profiting over 250K a year I'm sorry you can afford to be taxed higher.

Ok let me try to explain something small businesses do not qualify for corporate taxes and is not based off profits. Small businesses pay income taxes at the household level This means that the Obama plan to raise tax rates is a direct tax hike on small businesses—sole proprietorships, partnerships, S-corporations, and family farms. What this means is just like on your taxes they have to list the amount of money made by the business. I have a side business it is treated no differently then my regular taxes from my job (and god i wished i earned 250000 close to 32000) I get to deduct certain expenses to get an adjusted gross income but it does not work like corporate taxes which is taxed on profit. So if my business was to expand with say 5 employees and rented a property i can guarantee my business would be making at least 250000.00 a year. Now in my case since its a computer business i will simply create 2 to avoid the tax one sales one service but not all businesses can do this.



[edit on 10/16/08 by dragonridr]

Obama's tax plan is to cut taxes for all individuals with taxable income (AGI - all deductions and allowances) of less than $200,000, or families with under $250,000. Thus, for a small business owner to have their taxes cut, they will need to report taxable income of under $250,000 on their 1040. Most businesses only take a small % of gross sales, or even gross profit, as net income distributed to the owners in the form of wages and dividends. Meaning that over 95% of all small business owners will get a tax cut on their personal income from Obama.

In addition 95% of small business owners getting the tax cut on their personal income, all small businesses will get a tax credit for each new employee they hire, and they will get a 50% tax credit for the health insurance plan they provide for themselves and their employees.

For example, if a small business has 5 owners, and grosses 10 million dollars per year, and after all expenses are deducted (including employee salaries, equipment, insurance, etc.) they owners each take home $200,000k in wages and dividends, each one of them will get a tax cut even though the business distributed 1 million dollars in wages and income to it's shareholders.

Take Joe the plumber for example. He later clarified that he is interested in buying a business that has $250k in gross receipts and the owner makes $100k in taxable income. Considering Joe is likely to take a loan out and deduct the interest expense, he is likely to be making under $100k in taxable income in his business for at least the next 5 years. Thus, Joe the plumber not only would get a hefty tax cut now as an unlicensed plumber making $40k per year, he will also get a nice tax cut as a future owner of that plumbing business, far moreso than from Mccain who will not lower his income taxes and will make his health plan taxable.

In conclusion, Obama's plan is better for 95% of all working Americans, including 95% of all small business owners.

Originally posted by dragonridr
Ok let me try to explain something small businesses do not qualify for corporate taxes and is not based off profits. Small businesses pay income taxes at the household level This means that the Obama plan to raise tax rates is a direct tax hike on small businesses—sole proprietorships, partnerships, S-corporations, and family farms.

How do you reconcile this statement of yours with contents of
this IRS page, and schedule 1040C?

Please explain, because your info seems to contradict the law.

reply to post by dragonridr


Dradonridr. I urge you to not start two separate legal entities to avoid a non existent tax. As a small business owner, it is highly likely you are either a sole proprietorship / partnership, LLC, or S-Corporation, all which have pass through taxation. This means that your business has no taxable income, just "small business income" which passes taxfree through to you via wages or stock or membership interest dividends, at which point you only pay taxes on your personal income at your personal income tax rate (nothing will change in that respect).

You mention you make around $30k in taxable income. That means you get 10 times the tax cut from Obama vs Mccain ($900 tax cut from Obama, $90 tax cut from McCain).

If you hire 5 employees, and provide them all with health care, and even if your income in the business triples to $90k, here's what you will be looking at:

$15,000 tax credit for new jobs ($3,000 per employee Xs 5 employees)
50% tax credit for the health plan premiums you provide them.
$300 less in income taxes on the 90k in income under Obama vs McCain plan

Keep in mind you will write off the salaries and costs of each new employee and will not owe any taxes on that. Also note that starting 2+ entities does nothing, because all the small business income pass through to your single personal 1040 tax return where you will be taxed at the personal rate on all the taxable income you earn. However, you should be happy to know you will get 10xs the tax cut from Obama now and will have tax leveraged incentive to hire new employees and provide them with health care and other benefits!

reply to post by draconem


Thank God for a reasonable post from a reasonable person.
Hope you all see the light now.

Throughout the debate, Sen. Obama repeatedly showed an unfortunate ignorance of one of the fundamental principles of taxation: all taxes are paid by people. On multiple occasions, Obama claimed that businesses or corporations "can afford" to pay higher taxes.

source


People will pay for Obama's tax policy.

A good fact check on the last debate.

reply to post by draconem


Dragonridr's statements just don't add up. Claiming you'd be taxed on earnings before any expenses were paid out is just wrong. As a sole proprietor I can easily write off any legitimate business expenses - outside resources , computer equipment, office supplies, travel expenses, ect. My taxable income is what's left. So from where I stand, the Obama plan means bigger benefits.

If anything, it looks like investing in your business (and the economy) is encouraged under this plan.

I just can’t fathom the argument that anyone would rather make 47K a year than make 250K a year, even if the 250K opens you up to a higher tax rate. If Joe plumber has been saving to buy the business, I’m assuming he’s done so considering current tax rates. In that case, if he’s making under 603K a year in taxable income he’ll only be paying TWELVE DOLLARS MORE ! Granted, according to the McCain plan he’d save close to 8K – but that’s either here nor there. I doubt Joe started saving the second he heard about McCain’s plan, and has no right to be angry about Obama’s plan. If you don’t like it, don’t vote for the guy.

Wow. Can we make a requirement that in order to post in this thread you must be a small business owner? Or, maybe this thread just needs it's own motto: "Supply Ignorance".

What is so hard for people to understand about how the actual income of a business is determined?

Here's an interesting example of what most posters in this thread are not understanding.

Like me, a good friend of mine is a small business owner. He has 12 to 15 employees at any given time. Every month, he has over $500,000 in receivables. That's depositing over half a million dollars EVERY MONTH in the bank. Is he going to be affected by Obama's plan? No. what he actually earns, is below $100k/year.

Put it this way: If you own a small business, and are actually profitable enough to earn $250,000, after deductions and expenses, is it really that big of a deal that you're going to bay $12 more in taxes?

Do you complain when your child asks for cheese on their burger too?

If you're planning to base your vote on $12, and you're making a cool quarter million a year, you are part of the problem, and we don't want you're vote anyway. If you make enough to be subject to the real tax hike, that means you're making at least $603,000.00 a year. Over half a million bucks. This may just mean you will only be able to buy 2 or three of those exotic sports cars, and you may want to lease out 5 or 6 of your properties to supplement your income, as your 5 million dollar home is probably expensive as hell to heat.

Originally posted by jam321
reply to post by buddhasystem

 

That 47k isn't going to mean squat once those plumbers have to start paying their fair share of the corporate tax Obama plans to increase.

There has been a sane advice on this board that unless you've grown big, it pays to stay a proprietor, hence corporate tax does not apply. I looked at 1040C and see that you can write off an enormous amount of stuff if you are a proprietor -- even gas. So your putting 47k annual and corporate tax in one sentence looks, well, silly.

reply to post by jam321


Of course it'll be people paying these taxes !! Who owns and runs corporations ? People. Duh. In most cases very wealthy people.

What it translates into as I understand it is "People who make more than 603K a year can affoard it". If those people don't agree, then they can vote the way they want. What this thread is showing more than anything is that Obama's plan is the better choice for small business growth. At least that's what my commen sense assesment based on the facts presented so far is.