Patterico's Pontifications

10/7/2008

Obama’s Tax Plan and Small Businesses

Filed under: 2008 Election — DRJ @ 10:25 pm

[Guest post by DRJ]

At tonight’s Town Hall Presidential debate, I think Barack Obama said this about his tax policies [EDIT: according to the CNN transcript]:

“Only a few percent of small businesses make more than $250,000 a year. So the vast majority of small businesses would get a tax cut under my plan.”

The US Small Business Administration (SBA) defines a “small business” according to its average annual receipts or the number of its employees. Here are examples from the SBA’s Table of Small Business Size Standards setting forth the maximum average annual receipts by industry that a business can have and still be classified as a small business:

Crop production of all types — $750,000
Animal production except for cattle & chicken/eggs — $750,000
Cattle feedlots — $2.5M
Chicken/egg production — $12.5M
Forestry & logging — $7M
Fishing — $4M
Irrigation, sewage, water supplies — $7M
Housing construction — $33.5M
Heavy and civil engineering construction — $33.5M
Dredging and cleanup — $20M
Concrete, framing, and other housing contractors — $14M
Car dealers — $23-29M
RV, motorcycle, & boat dealers — $7M
Furniture, hardware, clothing & sporting good stores — $7M
Electronic stores — $9M
Supermarkets, gas stations & department stores — $27M
Pharmacies — $7M

There are many more examples at the link. In addition, most of the industries in the Table — such as manufacturers of food, beverages, apparel, print, oil/gas, plastics, plumbing, machinery, computers, electronics, electrical, transportation, and furniture — are considered small businesses based on their total number of employees instead of average annual receipts. In those industries, the cut-off between small and large businesses ranges from 500-1,000 employees per business/industry.

It’s difficult for me to imagine a business that has 50 or more employees (let alone 500-1,000) that has receipts of less than $250,000 per year. And, given the SBA definitions of “small business,” it seems likely that many small businesses in a wide range of industries have receipts of more than $250,000 per year.

If so, it is appalling that Obama would imply that, if he is President, a small percentage of businesses exceed the $250,000 per year cut-off for increased taxation under his tax plan. In fact, the number of businesses subject to additional tax may be large and could well be the 50% number I think John McCain mentioned.

Small businesses are vital to the American economy and Americans’ livelihoods, and it sounds like Obama wants to tax as many as he possibly can.

– DRJ

[UPDATE BY KARL: Welcome Limbaugh Listeners!  Patterico, DRJ and WLS do fine blogging here, so please feel free to visit the home page and generally poke around the place.]

200 Responses to “Obama’s Tax Plan and Small Businesses”

  1. i think it’s racist of you to criticize his plan. we all know that these business owners are fat cats getting rich off the poor working class members of society and that they don’t pay a fair tax now.

    we need to changed all that and Obama is the man to do it.

    (when he’s done, we’ll *all* be members of the poor w*rking class. %-)

    redc1c4 (27fd3e)

  2. DRJ – I agree with redc1c4. It’s racist of you on it’s face for you to criticize Baracky’s screwed up tax plan. Small businesses are the engine of our economy and if he wants to tax them all into oblivion that is his prerogative should he be elected Supreme Leader and President for Life. As mere mortals were are not qualified to question his naive judgement about economic matters. Plus, I’m not sure whether his tax plan is referring to the gross receipts of the businesses or the income before federal taxes (sort of AGI).

    daleyrocks (d9ec17)

  3. Don’t worry about that stuff. Obama has got this election in the bag!

    Governor Tom Bradley (b87509)

  4. DRJ, what about Senator Obama’s background has led anyone to think that the man knows a blessed thing about any kind of business at all?

    Thus, of course a business is seen as a source of income for the government to take and then give away as the government sees fit.

    Eric Blair (e60b98)

  5. I guess that the mantra should change from “Hope and Change” to “We Hope He Leaves Small Businesses Some Space Change”?

    Eric Blair (e60b98)

  6. Does “make” mean the same thing as “annual receipts”?

    Or is Obama talking about profits, and you’re talking about revenue?

    I don’t know the answer, that’s why I’m asking.

    Daryl Herbert (4ecd4c)

  7. Well that’s one-way to get the economy started after wall street completely tanks.

    What a genius.

    ML (14488c)

  8. daley and daryl,

    It’s not clear if Obama is talking about gross or adjusted receipts. It’s also possible that Obama (and McCain) were referring solely to individual small business owners who are taxed as individuals. I tried without success to find a clear statement from Obama on these issues. That doesn’t mean he hasn’t clarified them but I couldn’t find it.

    DRJ (c953ab)

  9. Obanal make a clear statement on something? that’ll be the day.

    how come everyone else always gets the good drugs? %-)

    redc1c4 (27fd3e)

  10. This place has a look at their tax plans.

    Obama’s got a lot of promises to pay for.

    http://www.taxfoundation.org/candidates08/

    ML (14488c)

  11. Obama can’t raise the revenues he needs for the new projects he’s committed to unless he taxes both more broadly and deeply than he’s promised.

    If he’s elected, this will happen. When it does, no one will be surprised.

    Beldar (8e2264)

  12. Care to enumerate all the various loopholes and deductables these businesses are allowed? Of course not. But they exist and they are considerable…hell they’re outlandish to tell the truth and if you add the savings from removing the burden of healthcare from these businesses it sounds to me like they’re going to do just fine. Better than they are right now, that’s for certain.

    And I think Obama is talking about individual small business owners.

    Check this tool out. It compares what an individual will pay under Obama or McCain.

    http://www.electiontaxes.com/

    Peter (e70d1c)

  13. ## 2, 6 and 8: “Make” indicates profits before taxes. If Obama actually means something else, that would be VERY interesting.
        Commentators have been indicating that Obama won this debate, or at least that McCain did not win the debate sufficiently convincingly to help his cause. However, I’m an undecided independent who is leaning more and more toward McCain. Of course, McCain’s promise to renegotiate mortgages did NOT endear him to me.

    Ira (28a423)

  14. I work with small and medium family owned businesses. Most are republican, the ones I deal with are at retirement age and most are selling and not passing the business to their children due to taxes, either now or coming shortly.

    Its sad, all of us want nothing more than to employ all Americans, white, black, poor, middle class, all we want is for them to give us a honest days work for an honest days pay, and god forbid – that they can persue their dreams.

    No ome wants to see people out of work, no one wants to see their fellow American down on his luck – Except Obama – rich people are the new Hitler, rich people are rich because they employ teams of hard working citizens who want to work for them and get paid.

    Its a voluntary system, apparently Obama is of another opinion, that somehow there is some sort of exploitation going on.

    EricPWJohnson (ca64bf)

  15. I was also bothered McCain didn’t clarify this.

    Based on 2002 tables, earning $244K in pre-tax put you in the top 10%, so if small business owners were normally distributed throughout the population, then 10% would be subject to this tax.

    My hunch is that small business owners generally are fairly successful, especially the ones that employ 5 or more people. Thus, it could be argued that perhaps 12-15% of small biz owners are making more than $250K.

    And from the link below, we see employers with 5-500 employees have about 56M employees under their umbrella.

    Again, round numbers, business owners making over $250K employ 8.4M people. From the link, the average salary for these workers is about $30K.

    From the link, there are about 5M firms with 5 to 500 employees.

    If you have a business owner making $300K and his taxes go up 10%, that’s $30K less he has. If he opts to cut one person loose…

    Then 5M firms * 0.15 = 750,000 business owners that will perhaps cut someone loose because they have to pay higher taxes.

    Currently our unemployment rate is 6.1% with 9.5M unemployed. Thus, there might be a path to argue that the small biz tax would increase unemployment by half a %.

    http://www.census.gov/epcd/www/smallbus.html

    matt (1e28e6)

  16. I think its fairly obvious from context that the tax is on profits — I don’t see why “make” would imply otherwise.
    I am certain that both candidates are promising more spending than they are promising spending cuts or tax hikes – particularly know that McCain has promised to buy everyone’s mortgage. Don’t see why that uniquely should count against Obama.
    Gotta tax someone, might as well be the wealthy.

    TomO (6f3447)

  17. Maybe TomO could be Baracky’s Secretary of the Treasury.

    JD (f7900a)

  18. He’s definitely talking pre-tax profits, even if he doesn’t know the difference himself. He probably couldn’t cogently explain it, but a spokesperson could. Given the revenue ranges above, and a reasonable pre-tax margin of, say, 15%, that puts a whole heck of a lot of small business in the >$250k bracket though.

    carlitos (74ba2c)

  19. #6, DH, when dealing with lawyers, politicians, and especially with contractual obligations, it’s wise to assume that any ambuiguity will be resolved to your disadvantage. Caveat emptor. I’m talkin’ belt and suspenders here.

    Ropelight (36617f)

  20. Destruction of small business has long been the unacknowledged goal of Democratic party.

    SPQR (26be8b)

  21. #11-Obama can’t raise the revenues he needs for the new projects he’s committed to unless he taxes both more broadly and deeply than he’s promised.
    If he’s elected, this will happen. When it does, no one will be surprised.
    Comment by Beldar — 10/7/2008 @ 11:43 pm

    But the bigger problem in the long run is, as you know Beldar, that increasing tax rates will not necessarily bring in more revenue as the economy continues to contract. It will just be more deficit spending, making us more dependent on our creditors.

    Of course, since O wants to voluntarily give more money to the (corrupt, inefficient, worse than good for nothing) UN, we will have bought the goodwill of the peace loving global community (Not).

    MD in Philly (3d3f72)

  22. COnsidering Gov Roddy’s “Gross receipt tax” he tried to get passed, and Obama’s close ties to said Gov and the rest of the Chicago machine, I think it is quite possible he was not talking about Profit.

    Scott Jacobs (a1c284)

  23. The tax is paid on profits and not on annual receipts so the list is irrelevant.

    Dennis D (ae900a)

  24. I agree with Dennis. Look at how small business are actually run, and you’ll see that very few of them have profits/distrubutions to shareholders of more than $250k per year.

    You have to remember that small businesses generally employ their owners. The owners salaries are not income for the business. The owners’ expenses (vehicles, tools, travel, etc) are not income for the business.

    Many small businesses show a bottom line of something near break even. That’s because once they’ve paid their employees and expenses, they generally roll their additional revenue right back into the business.

    Even with capital expenses such as buldings and large peices of equipment, this stuff is offset by depreciation over time.

    The tax code is already very small-business-friendly. As long as the business’s receipts are poured back into running the business, taxes aren’t much of a factor. Only if a small business owner wants to live large, by taking his/her business’s revenue and turning it into personal income, does the tax man really take a bite.

    Phil (6d9f2f)

  25. Scott Jacobs, I had forgotten about that proposed tax. Yikes.

    Dennis D – It’s pretty easy to assume a profit margin typical of a sector, and note that a whole lot of business on that list will have more than $250K profits. I have worked in businesses with profit margins from 3% to 30% of gross receipts.

    carlitos (74ba2c)

  26. “Only a few percent of small businesses make more than $250,000 a year. So the vast majority of small businesses would get a tax cut under my plan.”

    “And, given the SBA definitions of “small business,” it seems likely that many small businesses in a wide range of industries have receipts of more than $250,000 per year.”

    You are confusing profits with sales.

    jharp (2282bb)

  27. Profits put back into the business to grow the business are taxable. Capital investments are offset by depreciation over time, but the initial expense is paid for out of taxable profits.

    SteveG (71dc6f)

  28. We need the guy with the juco associates degree in accy to explain this.

    JD (5f0e11)

  29. “Profits put back into the business to grow the business are taxable. Capital investments are offset by depreciation over time, but the initial expense is paid for out of taxable profits.”

    Comment by SteveG — 10/8/2008 @ 7:45 am

    You obviously know little about business.

    What do mean “profits put back into the business”?

    Cash deposited into a checking account?, buying a new truck?, buying office supplies?, buying advertising?

    All affect a small businesses tax liability and are treated differently.

    jharp (2282bb)

  30. Phil:

    Look at how small business are actually run, and you’ll see that very few of them have profits/distrubutions to shareholders of more than $250k per year.

    Link please.

    DRJ (8b9d41)

  31. Having been a small business owner, I can tell you that NOTHING OTHER THAN PROFIT (receipts less all expenses) makes it to the “income” part of Form 1040. So, Obama is talking about businesses that CLEAR $250K for a given owner (there may be several in a partnership), not simply receipts.

    However, the small businesses that DO make this kind of money are the successful ones which provide most of the small business jobs. So McCain is right when he says that Obama’s plan will affect hiring since low-income businesses don’t have a lot of employees (and certainly not for long).

    Kevin Murphy (0b2493)

  32. DRJ – Nice

    daleyrocks (d9ec17)

  33. If Democrats (Marxists} can tank the American economy, ending capitalism in this country. They will impose a socialist economy upon us. Looks like their plan is working and the American people are foolishly following the pied piper that Obama is. Some say it may take 50 years to throw off the bums. I think we can do it in six months by exercising what the Second Amendment was written into the consitution for.

    Zelsdorf Ragshaft III (620731)

  34. Another definition of small business is 25 employees or less–if you have less than 25 employees you are exempt from a whole lot of regulations and requirements. (NB–this is based on the situation some twenty years ago, when I worked for such a business. It may have changed without my being aware of it in the interim.)

    Given the context of the discussion being individual income tax, this also means we are talking only about Subchapter S corporations, proprietorships, and partnerships, and not any small business not organized as a non-Subchapter S corporation.

    kishnevi (0b82c2)

  35. Kishnevi,

    One of my problems with Obama is that people are always certain they know what he means, even though their opinions vary. In other words, he is vague enough to be all things to all people.

    DRJ (8b9d41)

  36. Kishnevi – One of the smaller business units in the last company I worked for was about 60 people, but they generated about $3 million of revenues per employee.

    daleyrocks (d9ec17)

  37. This is just another example of political prestidigitation.
    Obama wants us to believe that he will only be increasing the taxes on those small-businesses that generate AGI’s of 250K or more.
    But, being the good Marxist/Socialist that he and the Dem Party have become, he is actually talking about Gross.
    They will impose a Gross Receipts Tax on ALL businesses that will cripple the economy, and force most Mom-and-Pop businesses out-of-business.
    Move along now, nothing to see here.
    All Hail Obama!

    Obama.
    Leader of the new Ameriki.
    President for Life!

    AOracle (db2f44)

  38. One of the smaller business units in the last company I worked for was about 60 people, but they generated about $3 million of revenues per employee.

    Comment by daleyrocks — 10/8/2008 @ 8:57 am

    Not sure what you are getting at but a company that is doing 180 million might not be what most call a small business.

    jharp (2282bb)

  39. You guys all know how taxes work, so let’s look at this honestly. Obama’s tax plan would raise taxes on profits above $250,000 a year. So if a company owner makes $300,000, the tax increase would apply only to the $50,000. If the taxes go up 10%, that would be an increase of $5,000. Not a big deal, and if you have a decent tax preparer, there are scads of ways to lower your taxes.

    Andy (d81ada)

  40. “They will impose a Gross Receipts Tax on ALL businesses”

    Complete utter nonsense.

    jharp (2282bb)

  41. Andy – evidence please? I have not even heard Barack claim that the first 250,000 would be exempt.

    This is a perfect example of people reading into his words what they want to see.

    95 percent will see a tax cut is bullshit, since the majority pay no net taxes.

    JD (5f0e11)

  42. Fat Cat? Please define what constitutes a Fat Cat. Is that a technical term? What’s the minimum income, house size, # of cars one has to have to be a Fat Cat? What happened to the American Dream of being rewarded for hard work? Obama is an idiot if he thinks he can raise taxes on the many SubS corporation owners in America. It will lead to less jobs. As an Independent, I’d like to see spending slashed, especially military where even China and Russia pale in comparison to amount of money we spend, and a redeployment of programs to educate and train US citizens. Why has the cost of education gone up over 450% in recent years? Far more than Oil? Spending has to come down, far more than taxes, which should also come down. Hell, Washington can’t even pass an “Emergency” bill without porking it with goodies for wooden bow & arrow manufacturers!

    Jerry (374e4f)

  43. JD and DRJ, I believe you both went to law school, both of you should have some basic knowledge of how businesses work, and how taxes work.

    A business’s receipts are not a business’s income. Just ask Ford or GM — the way Patterico characterizes it, those two companies are “making” tens of billions of dollars this year, when in fact they are losing money hand over fist.

    Yet Patterico pulls out a measure of receipts to refute a statement by Obama about what a business “makes” in the context of what is taxable.

    You guys are certainly not the brightest bulbs in the box when it comes to basic accounting. No wonder you think Fannie Mae and Freddie Mac’s low-income-loans programs caused the current financial meltdown; you don’t even know the difference between receipts and income.

    Phil (6d9f2f)

  44. jharp and Phil,

    The SBA calculates “receipts” as:

    Receipts means “total income” (or in the case of a sole proprietorship, “gross income”) plus “cost of goods sold” as these terms are defined and reported on Internal Revenue Service (IRS) tax return forms …

    As far as I can tell, there is no definition in the SBA regulations or the Tax Code of “make” and, despite your claims, there is a reasonable basis to construe “make” to refer to receipts or profits. In other words, “make” is not a precise term from a legal, accounting or tax standpoint.

    Maybe Obama is referring to profits or maybe he is referring to receipts/income. It’s also possible he doesn’t care that there is a difference because he intends to speak in generalities. We don’t know because Obama’s statements and plans are vague, and I submit he intends to be vague so he can be all things to all people.

    Finally, and this is directed solely at Phil, I wrote this post – not Patterico – so you owe him an apology. As for me, I don’t appreciate your slur against me as a lawyer or businessperson. I am not interested in an apology so don’t bother, but I want you to know I have a very long memory. I will never forget that you chose to attack me personally when there was no reason or need to do so.

    DRJ (c953ab)

  45. DRJ – Phil’s an ambulance chaser, but he should show some professional courtesy.

    daleyrocks (d9ec17)

  46. Phil – I have been too busy killing, torturing, jailing, and otherwise oppressing minorities to have time for law school.

    DRJ – Phil lost my respect a loooooooong time ago.

    JD (5f0e11)

  47. OK, well here’s a question. No matter _what_ the definition of “small business” is, isn’t a 5% increase in tax on a business that makes, say, $1,000,000 around $50,000?

    And isn’t $50k per year a decent salary? I mean, wouldn’t it be better if the business paid that to a worker as income instead of the gummint funding another “Piss Christ?”

    Just wondering out loud.

    CW Desiato (614aa7)

  48. Well, if it’s going to be expected that the RW Fascist Neo-Cons (I think that is meant to include me) are going to be killing, torturing, jailing, and otherwise oppressing minorities (h/t JD), I’m going to have to spend more time at the re-loading bench…
    So many targets,
    So little ammo!
    Now.

    Another Drew (db2f44)

  49. The SBA calculates “receipts” as: Receipts means “total income” (or in the case of a sole proprietorship, “gross income”) plus “cost of goods sold” as these terms are defined and reported on Internal Revenue Service (IRS) tax return forms …

    The SBA has nothing to do with calculating taxes. What it calls “income” has nothing to do with what is actually “income” for tax purposes.

    Using SBA statistics and definitions to challenge Obama’s tax policy arguments would be like using EPA statistics and definitions to criticize McCain’s energy policies. Sure, they involve some of the same subject matter, but the rules and perspectives are completely different.

    Phil (6d9f2f)

  50. I mean, wouldn’t it be better if the business paid that to a worker as income instead of the gummint funding another “Piss Christ?”

    Phil (6d9f2f)

  51. I mean, wouldn’t it be better if the business paid that to a worker as income instead of the gummint funding another “Piss Christ?”

    That’s exactly why most small businesses don’t carry a lot of profit or taxable income on their books. The money over and above the cost of goods and services is usually paid as salaries to the owners, and taxed as personal income, not income of the business entity.

    In fact, lots of businesses are structured that way — S Corps, and LLCs for example — where the business simply doesn’t make “income” for tax purposes, but simply passes the money through to the owners/members as personal income.

    That’s just my rough understanding of it — I’m not a tax expert by any means. But I know enough to know that Patteric’s post completely misunderstands the tax structure about which McCain and Obama are arguing.

    Phil (6d9f2f)

  52. Once again, Phil, it’s my post and not Patterico’s.

    DRJ (c953ab)

  53. Keep digging Phil!

    You have still not answered DRJ’s question @30.

    daleyrocks (d9ec17)

  54. Phil,

    I don’t understand your point regarding the difference between income and receipts in this context, especially since Obama didn’t use either term. Part of my point is that we don’t know what he’s talking about. Nor do I get your objection to a more easily understood SBA link, especially since my SBA link specifically provides it is based on IRS definitions. But if it helps, this IRS link provides a similar definition. And I agree IRS references are preferred but in my view they are overly cumbersome for the purpose of analyzing Obama’s nebulous statements.

    DRJ (c953ab)

  55. Phil: I find comment #43 to be peculiar. ISTM that the question is what does Sen. Obama mean by term [x]“. It’s fair to say that you think it’s logical to conclude that Sen. Obama means to use the term the way it is used in “basic accounting”; but it strikes me as being unfair to then conclude that anyone who doesn’t understand what Sen. Obama means is unfamiliar with the way the term is used in basic accounting. It could just be that they aren’t sure that Sen. Obama means to use the term that way.

    For what it’s worth, I would assume that Sen. Obama means “profits” when he uses the term ‘make [x]” in a discussion of taxes as applied to businesses; that seems to me to be the natural meaning of the phrase. But I also think that Sen. Obama could be more precise than he is.

    aphrael (e0cdc9)

  56. Also, Phil, I know about Sub S and partnership tax treatment and I recognized in this comment that it might be what Obama was talking about. Or it might not.

    DRJ (c953ab)

  57. DRJ – I think it would help if Phil could find something from Obama’s web site to descrobe exactly what he meant last night. Obama, as you point out, has an unfortunate habit of making a lot of jello-like statements. He does not like specifics for a reason. They’re too specific.

    daleyrocks (d9ec17)

  58. DRJ, in the event that Sen. Obama is talking about partnership tax treatment, I expect the marginal rate would still be determined by AGI, which is determined after business expense deductions … which makes it a approximate measurement of profit, not of receipts.

    aphrael (e0cdc9)

  59. Obama’s quote was “Only a few percent of small businesses make more than $250,000 a year. So the vast majority of small businesses would get a tax cut under my plan.

    Thus, it’s clear that “makes” refers to taxible income. Defining “makes” as anything else wouldn’t logically lead to him saying that businesses that “make” less than $250k per year would get a tax cut.

    He’s not talking about gross receipts, or gross income, or any of the other numbers being thrown out to dispute his statement.

    Phil (6d9f2f)

  60. Should a small business owner ever even think about making a profit, rest assured Baracky will tax the holy hell out of it. Because of the fairness.

    All of your profit are belong to us.

    JD (5f0e11)

  61. By the way, apologies to Patterico; I did miss the fact that DRJ posted this.

    Phil (6d9f2f)

  62. The SBA calculates “receipts” as:

    Receipts means “total income” (or in the case of a sole proprietorship, “gross income”) plus “cost of goods sold” as these terms are defined and reported on Internal Revenue Service (IRS) tax return forms …

    As far as I can tell, there is no definition in the SBA regulations or the Tax Code of “make” and, despite your claims, there is a reasonable basis to construe “make” to refer to receipts or profits. In other words, “make” is not a precise term from a legal, accounting or tax standpoint.

    Maybe Obama is referring to profits or maybe he is referring to receipts/income. It’s also possible he doesn’t care that there is a difference because he intends to speak in generalities. We don’t know because Obama’s statements and plans are vague, and I submit he intends to be vague so he can be all things to all people.

    Comment by DRJ — 10/8/2008 @ 10:36 am

    You are 100% dead wrong.

    Businesses are taxed on their earnings just as individuals are.

    I’ll take it one step further to illustrate the absurdity of your claim.

    Joe Sixpack takes in $250,000 in his garage door installation business. However Joe had costs of $300,000 for gasoline and cost of goods sold.

    Thus Joe lost $50,000.

    You are not so dense to believe Obama is proposing a tax on Joe’s $300,000 in receipts?

    Are you? You can’t be that far off the deep end? I hope.

    jharp (2282bb)

  63. Should a small business owner ever even think about making a profit, rest assured Baracky will tax the holy hell out of it. Because of the fairness.

    All of your profit are belong to us.

    Comment by JD — 10/8/2008 @ 12:05 pm

    Wrong again.

    Obama has proposed an increase for those who earn in excess of $250,000.

    And just for the heck of it JD. Our current deficit is running about $500 billion.

    How do you propose we pay our bills? I’m open to debate.

    Or do we just pass them on to our children? Like W and the GOP has done for the past 8 years to the tune of $ 5 trillion.

    jharp (2282bb)

  64. Aphrael,

    I don’t know what Obama refers to so the post is intended to be one illustration of how his tax policies might relate to the business world. But I admit the $250,000 number troubles me because it is the same number Obama identified as a cut-off point in his individual federal income tax plan.

    As I understand his tax plan, Obama will not raise taxes of taxpayers making less than $250,000 annually, but he will raise taxes on those making over $250,000. It shouldn’t matter where a taxpayer’s income comes from — from being employed by another, from a Sub S, or from a partnership — if all income is passed through and/or taxable as individual income. But Obama made a point to talk about this in the context of small businesses.

    Maybe it’s true that Obama is only talking about individuals doing business for themselves, but I don’t think it’s clear he means it that way. If that’s what he is talking about then he could also say he advocates the same tax plan for small businessmen that he advocates for people who are employees. The fact that he didn’t say that raises red flags with me. Plus, the fact that Obama has to come up with a lot of money to fund his promised programs means that money has to come from somewhere, and the only other place it can come from is businesses.

    DRJ (c953ab)

  65. DRJ – He is going to close loopholes, and that will easily make up the $800,000,000,000 – $1,000,000,000,000 in new spending he is proposing.

    JD (f7900a)

  66. DRJ: that’s a fair point.

    My suspicion is that any plan which eliminates expense deductions will run into a wall in Congress, and so even if there is a different rule for businesses, it will apply only to profit; but I concede that to be speculation.

    JD: closing loopholes is the liberal equivalent of eliminating wasteful spending; both sound good, but neither will yield anything like the revenue their proponents expect.

    aphrael (e0cdc9)

  67. Gross Receipts Tax!

    It’s coming.
    The Libs have always thought of business as just a piggy-bank to be tapped.
    They know that businesses don’t pay taxes, they just collect them (they won’t admit that, for that would destroy more of their miniscule credibility), and this is a way, in their minds, to increase tax revenue without increasing the ire of voters over increased taxes.
    The evil business owner’s will pay.

    AOracle (db2f44)

  68. DRJ – He is going to close loopholes,

    Comment by JD — 10/8/2008 @ 12:22 pm

    That’s how Ronald Regan handled it.

    Reagan upped my self employment tax from 1 1/2 times the 7.6% to double the 7.6%.

    Then changed the rules of depreciation and pitched the investment tax credit.

    Or, in winger terms increased my taxes.

    jharp (2282bb)

  69. JD: closing loopholes is the liberal equivalent of eliminating wasteful spending; both sound good, but neither will yield anything like the revenue their proponents expect.

    Comment by aphrael — 10/8/2008 @ 12:24 pm

    Reagan closed loopholes.

    jharp (2282bb)

  70. First of all, nobody is going to get a tax cut under Obama. The 40% who don’t pay taxes might get a bit more welfare but he will NOT cut taxes for anyone who now pays taxes.

    Second, it’s interesting to see harp morph into a financial expert. I pay about $5000 a year in accounting fees to maintain a personal corporation and know a little about Sub Chapter S corps and partnerships. What Obama is saying is crap, first of all.

    Second, the only small businesses that “make” less than $250k are convenience stores and the like. Most of those small business owners file personal tax returns and lose deductions that I get by being incorporated, like deducting medical expenses. They can’t deduct them.

    McCain’s health plan might even help out those small business owners more than any Obama tax “cut.”

    I don’t think Obama knows what he is talking about, and although McCain isn’t much better, it is Obama with the radical friends and the “Chicago Way” which is still raising taxes as the city strangles.

    Mike K (d8deba)

  71. Dr. K. writes:

    “…Second, it’s interesting to see harp morph into a financial expert….

    You seem surprised. Just keep track, like many of us have been. The fellow is hydra-headed in his many expertises!

    Eric Blair (2708f4)

  72. Phil – You have still not offered any support for the assertion you made in comment #24, which DRJ requested in comment #30.

    You continue to make aggressively ignorant comments about taxation and I suggest you stop digging. Salary expense is usually never considered income to a business as you characterized it in comment 24. If the business is organized such that the owners will be taxed on it individually, it doesn’t matter if the profits are left in the business are left it it or not. Taxes will be owed.

    “You have to remember that small businesses generally employ their owners. The owners salaries are not income for the business. The owners’ expenses (vehicles, tools, travel, etc) are not income for the business.

    Many small businesses show a bottom line of something near break even. That’s because once they’ve paid their employees and expenses, they generally roll their additional revenue right back into the business.”

    Stop digging Phil.

    daleyrocks (d9ec17)

  73. My wife and myself operate a small business, which is just the two of us at present. We’ve incorporated into an “S” Corp. partnership, and I can tell you that Phil (as usual) has no idea in God’s green earth what the hell he’s talking about.

    Phil, try actually operating a business and get back to us, rather than twisting yourself into pretzels in order to make The Messiah’s tax plans into something they’re not – which is completely regressive in nature and intent.

    Dmac (cc81d9)

  74. “Not sure what you are getting at”

    harptard – Most people with your obvious limitations would have ended their comment right there.

    daleyrocks (d9ec17)

  75. Never mind – Daley just made my point much more succinctly. That’s exactly how we’ve been operating over the past three years, since the beginning.

    Dmac (cc81d9)

  76. “Second, it’s interesting to see harp morph into a financial expert.”

    I’m not an expert nor do I profess to be.

    I have owned and operated my own business for 25 years.

    And I have a bachelor of science degree in accounting from Ohio State.

    And the claim that Obama is going to tax receipts is ludicrous.

    And I’ll admit I know little of Subchapter S corporations other than they can be good for some and not good for others. And for my business there was no reason for it.

    And I’d to hear one of you brain surgeon’s proposals on how we pay our bills.

    You know, the ones that are increasing $500 billion a year faster than receipts.

    jharp (2282bb)

  77. That’s exactly why most small businesses don’t carry a lot of profit or taxable income on their books. The money over and above the cost of goods and services is usually paid as salaries to the owners, and taxed as personal income, not income of the business entity.

    In fact, lots of businesses are structured that way — S Corps, and LLCs for example — where the business simply doesn’t make “income” for tax purposes, but simply passes the money through to the owners/members as personal income.

    That’s just my rough understanding of it — I’m not a tax expert by any means. But I know enough to know that Patteric’s post completely misunderstands the tax structure about which McCain and Obama are arguing.

    Yes, I know all this. I used to be an S-Corp when I lived in California for exactly this purpose. Now that I live in “no state, county or city-income tax Tennessee,” I don’t have to jump through those hoops. I mean, LA charged us around $3k in taxes JUST TO LEAVE THE [many expletives] COUNTY!

    Regardless, my question stands. If you increase taxes on businesses, big, small or corporations, that cuts into their ability to hire people or give raises, right?

    CW Desiato (614aa7)

  78. If you increase taxes on businesses, big, small or corporations, that cuts into their ability to hire people or give raises, right

    I don’t see why that follows. I would expect that salary expenditures are deductible business expenses, and since tax is imposed on income after expenses have been deducted, increasing the tax should have no direct effect.

    I can see an argument under which there may be second-order effects insofar as an overall tax increase will result in an increase in price of services, etc, the company buys, thereby reducing the amount of money they have for other things. But increasing taxes on income after business deductions are taken into account should have no direct effect on a company’s ability to pay for deductible expenses.

    aphrael (e0cdc9)

  79. Unless the decreased profits puts the business in a more precarious position, causing the owners to believe they need to cut costs because they fear they not be able to pay their expenses in the near future.

    It’s like a flood. You don’t worry when the house is 5 feet above the water line. You start to worry when the margin is 5 inches.

    DRJ (c953ab)

  80. “Regardless, my question stands. If you increase taxes on businesses, big, small or corporations, that cuts into their ability to hire people or give raises, right?”

    No. As the new hires are expenses that are not taxed at all.

    As long as a new hire is profitable, big, small and medium businesses will continue to hire.

    jharp (2282bb)

  81. Frankly, that argument is silly anyways, because any tax on a business would be passed to the consumer anyways…

    Scott Jacobs (a1c284)

  82. Frankly, that argument is silly anyways, because any tax on a business would be passed to the consumer anyways…

    Comment by Scott Jacobs — 10/8/2008 @ 1:27 pm

    Not quite true.

    If you are in a perfectly competitive or close to a perfectly competitive market it is mostly true.

    If you’re not, such as my business, you haven’t been charging enough if consumers of your service or product were willing to pay more.

    That is business 101. What you sell something for has no relationship to what you paid for it or what your expenses are.

    The selling price is the most you can get.

    jharp (2282bb)

  83. jharp:

    You are not so dense to believe Obama is proposing a tax on Joe’s $300,000 in receipts?

    As I read the IRS/SBA definition of receipts, it represents income plus the cost of goods sold. In accounting terms applied to your example, that would be $250,000 + (-$300,000) = -$50,000. So I think we get to the same place. (I also think Joe has a problem but that’s another issue.)

    To me the question is what does Obama mean when he says he will tax small businesses that make more than $250,000? I want him to define the word “make” and explain how he uses it in the context of small businesses.

    DRJ (c953ab)

  84. Comment by jharp — 10/8/2008 @ 1:34 pm

    jharp is a self-admitted exploiter of the working class, and raper of the community. He is just the type of business owner that the Dems have been running against since 1930. He charges all that the market will bear, pays only what he has to for help, and pads the books with all of his personal expenses to minimize any tax responsibility.

    Who Knew?

    jharp is a Republican!

    AOracle (db2f44)

  85. How can businesses afford to hire more people when their cash flow has been restricted by a higher quarterly tax bill? and when rents & supplies & maintenance & repairs have to take top priority for those remaining cash flow dollars?

    Icy Truth (1468e4)

  86. For DRJ,

    http://www.barackobama.com/pdf/taxes/Tax_Plan_Facts_FINAL.pdf.

    Comment by AOracle,

    “He charges all that the market will bear, pays only what he has to for help”

    Yeah, I do. It’s called capitalism. What are you, some sort of commie. And I suppose you go to work for less than you someone is willing to pay. And I’m sure you happily pay more than it takes to hire someone.

    “and pads the books with all of his personal expenses to minimize any tax responsibility.”

    This is false. I was audited back in the 80′s and learned two things. First it is remarkably easy to trace every dollar and second that I didn’t want to do it again. It’s a major hassle.

    And everything came out to be order (I owed a little bit) and the IRS agent was fair and polite.

    jharp (2282bb)

  87. jharp:

    As long as a new hire is profitable, big, small and medium businesses will continue to hire.

    As Icy Truth suggests, that’s true in theory but it’s not a simple equation, especially with small businesses.

    Let’s assume I own a car dealership and I know I can add a salesperson and sell more cars. In theory, as long as the salesperson sells more than enough to cover salary, taxes, and benefits, it’s worth it. But businesses also have to take practical intangibles into consideration. Do I have an office to put the new salesperson in or do I have to build out more space? Will the new salesperson complement my existing sales force or be a disruption? Will we need additional training, support staff, and equipment?

    I’m sure you know all these factors enter into the business decision, but I also think there’s another important factor: As the business owner, do I have the confidence that I can hire and pay my new employees? I can’t speak for all small business owners but I think I’m typical. I avoid hiring new employees unless I’m confident I have work for them and can afford to pay them now and in the foreseeable future. If I can help it, I’m not going to hire someone that I have to lay off in 6 months.

    In other words, business owners’ confidence in the economy is just as important as consumer confidence. If I’m worried about my tax bill, it affects my hiring practices.

    DRJ (c953ab)

  88. Dmac said Phil, try actually operating a business and get back to us, rather than twisting yourself into pretzels in order to make The Messiah’s tax plans into something they’re not – which is completely regressive in nature and intent.

    Whatever, Dmac. Because you own your own SCorp, you’re a tax genius and I know nothing — fine.

    I do sincerely wish you the best in operating your small business, especially in these trying times.

    Phil (6d9f2f)

  89. “I don’t see why that follows.”

    aphrael – Perhaps consider it from the perspective of a business owner looking at two alternatives – investing more money to grow a business or playing the stock market with the money. If the individual thought his stock picking prowess was such that he could generate a certain percentage return in the market, increasing the tax on his business just made that alternative less attractive. If he was indifferent between the two alternatives before the tax increase, now the money should stay in the market.

    daleyrocks (d9ec17)

  90. Comment by DRJ — 10/8/2008 @ 2:10 pm

    Your post has merit.

    And no one likes tax increases of any kind.

    How do you propose we address our $500 billion annual shortage?

    jharp (2282bb)

  91. I’ll try to explain what we are all trying to get at, I believe.

    Obama’s tax rate increase for those making over 250K is 6% (I think and feel free to fact check and correct me if I’m wrong).

    There could be a point where the additional profit brought on by a new hire being 6% less could nix the new hire.

    But keep in mind the reasoning would go something like this. Keep in mind that profits on wages are usually tripled.

    I’d like to hire Joe Sixpack and it will cost me $50,000. This should bring in $150,00 in additional revenue for a new gain of $100,000.

    I ma going to have to pay and additional $6,000 in taxes to hire Joe. Do I do it?

    And this simple example ignores fixed costs which I openly admit can be substantial but not always.

    My idea here is not to deceive but to lay out what we are discussing. Feel free to poke holes where necessary.

    And I’ll say it again, anyone got a better ideas how to make up for our $500 annual shortfall?

    jharp (2282bb)

  92. I don’t think Barack knows what he means by the word “makes” and neither do I.
    I’d like to think a guy as articulate as Obama could do so, but business doesn’t seem to be his strong suit.

    jharp. ealier I was responding to Phil in #24 when he was saying:
    “As long as the business’s receipts are poured back into running the business, taxes aren’t much of a factor.”

    I find this to be untrue.
    I was not precise in my language when I replied.
    As you pointed out, Cash deposited into a checking account, buying a new truck, buying office supplies, buying advertising, all affect a small businesses tax liability and are treated differently.

    Cash in a checking account can be taxable even if it is there to cover payroll and material expenses.
    That truck or that piece of heavy equipment may have to be paid for out of taxable income if it exceeds a threshold and cannot be expensed. Granted you get depreciation over time, but in the immediate, you will owe taxes on money that has been spent on equipment needed for production and that money is not available to pay taxes. That is one reason why some people lease rather than own.

    I’ve run profitable businesses, but thanks for telling me I know nothing. I can always learn and it pays to be able to take criticism.
    I’d intended to make a point that a small business owner can owe taxes on “income” that is absorbed into the operation of the business.
    Early in my business life, I asked my accountant how on earth I could owe so much. I showed him my personal check register, the deposits, the withdrawals and pointed out that I had not received that much money, I’d paid quarterly taxes, I’d spent less than I’d earned, plowed all the money into growing labor force, buying equipment, but still owed a huge tax bill and why was that and where was I supposed to get the money to pay it? I’d booked a $100,000 payment that came in right before Christmas, but the money it represented was more than accounted for in the opening days of the new year.
    Not everything is an expense, and managing cash in the bank of December 31 can be key.

    SteveG (71dc6f)

  93. Andy-
    “You guys all know how taxes work, so let’s look at this honestly. Obama’s tax plan would raise taxes on profits above $250,000 a year. So if a company owner makes $300,000, the tax increase would apply only to the $50,000. If the taxes go up 10%, that would be an increase of $5,000. Not a big deal, and if you have a decent tax preparer, there are scads of ways to lower your taxes.”

    This is weird sounding

    Seems to me if your new tax bracket moves from 30% to 40% if you exceed the threshold you’d owe it on all taxable income, but even if it worked the way you describe, on that $50,000 taxable dollars you’d owe $20,000 of it to the IRS. Sure it’s only $5000 more than before in your scenario, but something about owing 40 out of every 100 seems a little steep for the price of doing business in the USA

    SteveG (71dc6f)

  94. “Cash in a checking account can be taxable even if it is there to cover payroll and material expenses.”

    Cash is not taxed. Profits are taxed.

    By the way, if you don’t mind what is your business?

    “I’d intended to make a point that a small business owner can owe taxes on “income” that is absorbed into the operation of the business.”

    True but not for me. I use a cash basis.

    And your depreciation mention is accurate. Ronald Reagan fixed us on that one.

    My first year in business I got an investment tax credit for buying a new car.

    And I’ve got a story about booking revenues in early Jan when I deposited the check. The check was dated Dec 31 and it got pretty ugly. About $14,000 worth of ugly.

    jharp (2282bb)

  95. SteveG,

    “Seems to me if your new tax bracket moves from 30% to 40% if you exceed the threshold you’d owe it on all taxable income,”

    No. You are mistaken.

    “but even if it worked the way you describe, on that $50,000 taxable dollars you’d owe $20,000 of it to the IRS. Sure it’s only $5000 more than before in your scenario, but something about owing 40 out of every 100 seems a little steep for the price of doing business in the USA”

    I believe the rate is to go up 6% but could not confirm. Any help would be appreciated.

    And without getting too personal what is your business? Of course it’s fine for you to decline.

    jharp (2282bb)

  96. SteveG – Andy just made up that $250,000 threshold out of thin air.

    JD (f7900a)

  97. Seems to me if your new tax bracket moves from 30% to 40% if you exceed the threshold you’d owe it on all taxable income

    That is not, in general, how the internal revenue code works. It speaks in terms of marginal rates, as exemplified by this paste from IRC Section 11:

    The amount of the tax imposed by subsection (a) shall be the sum of—
    (A) 15 percent of so much of the taxable income as does not exceed $50,000,
    (B) 25 percent of so much of the taxable income as exceeds $50,000 but does not exceed $75,000,
    (C) 34 percent of so much of the taxable income as exceeds $75,000 but does not exceed $10,000,000, and
    (D) 35 percent of so much of the taxable income as exceeds $10,000,000.

    aphrael (e0cdc9)

  98. Because you own your own SCorp, you’re a tax genius and I know nothing — fine.

    I made no such claim, I’m fairly poor at accounting issues and tax liability (that’s why we have a lawyer and an accountant on retainer). The point was that you’re discussing the issue as some kind of college course, whereas I’m discussing it as an actionable event in the real world.

    Dmac (cc81d9)

  99. jharp:

    How do you propose we address our $500 billion annual shortage?

    No matter how much money the government takes in, it has found ways to spend it. I think we need to get spending under control first.

    DRJ (c953ab)

  100. aphrael,

    Where did you get your numbers?

    This is what I found.

    Today.

    33% on income from 220K to 357K
    35% on income from 357K and up

    Obama’s proposal.

    36% and 39.6 percent on what was referred to as the same thresholds.

    And please correct me if I’m wrong. I’d like to get it right.

    jharp (2282bb)

  101. No matter how much money the government takes in, it has found ways to spend it. I think we need to get spending under control first.

    Comment by DRJ — 10/8/2008 @ 3:14 pm

    You don’t mean ending the $12 billion a month Iraq goodwill mission?

    And how can you support republicans then after they just shattered the record books on deficit spending?

    $5 trillion for God’s sake. That’s some record they’re running on.

    Both parties spend. The GOP borrows and spends. At least the democrats pay the bills.

    jharp (2282bb)

  102. That section is, by the way, the section which deals with taxes on corporations. My guess is that Obama is suggesting to replace it with:

    The amount of the tax imposed by subsection (a) shall be the sum of—
    (A) 15 percent of so much of the taxable income as does not exceed $50,000,
    (B) 25 percent of so much of the taxable income as exceeds $50,000 but does not exceed $75,000,
    (C) 34 percent of so much of the taxable income as exceeds $75,000 but does not exceed $250,000,
    (D) 35 percent of so much of the taxable income as exceeds $250,000.

    aphrael (e0cdc9)

  103. That’s the text of Title 26, Section 11, pertaining to the income tax on corporations. I got it via FindLaw, and I haven’t verified with Lexis or Westlaw.

    The individual income tax rates are harder to calculate because of the existence of different filing status, the overall complexity of Section 1, and the fact that the 2000 tax cuts were not enacted by modifying the rate tables directly.

    aphrael (e0cdc9)

  104. I should clarify: #97 is part of the text of Title 26, Section 11. There is complexity which I am eliding.

    aphrael (e0cdc9)

  105. Thank you.

    It makes Obama’s slight increases seem very reasonable to me.

    Let’s face it. We’ve got a $12 billion per month war to pay for. And $250 billion in interest alone on the money W and the GOP pissed away.

    Not to mention the $ 1 trillion plus in bailouts.

    jharp (2282bb)

  106. My idea here is not to deceive but to lay out what we are discussing. Feel free to poke holes where necessary.

    And I’ll say it again, anyone got a better ideas how to make up for our $500 annual shortfall?

    Comment by jharp — 10/8/2008 @ 2:41 pm

    I think your explanation is fair enough and it makes the point more clearly. Spend $6k to make $100k(-ish)…sure. However, I still think tax increases stifle incentive and I’m not convinced that the gummint can spend the money any more wisely than an individual giving to charity, investing, buying health care, etc.

    RE: Bridging the shortfall gap: spend less.

    I mean, here at Chez Desiato, we tend to not buy things we can’t pay cash for. We don’t use credit cards. The only debt we have is a mortgage.

    Why doesn’t the gummint adopt a similar approach?

    CW Desiato (614aa7)

  107. Why doesn’t the gummint adopt a similar approach?

    Because they have become addicted to the power of the printing press spending other-peoples’-money.

    AOracle (db2f44)

  108. Because they have become addicted to the power of the printing press spending other-peoples’-money.

    Comment by AOracle — 10/8/2008 @ 4:08 pm

    Yes, they have.

    And the worst group in the history of the earth, George W. Bush and the Republican Party still has support from folks who call themselves conservatives.

    Go figure.

    jharp (2282bb)

  109. Let’s face it. We’ve got a $12 billion per month war to pay for. And $250 billion in interest alone on the money W and the GOP pissed away.

    Not to mention the $ 1 trillion plus in bailouts.

    One might suspect that Barack’s additional $800,000,000,000 – $1,000,000,000,000 in new spending might concern you.

    One might also suspect that raising taxes during an economic downturn might reduce tax revenues, making the deficit and debt even larger.

    JD (f7900a)

  110. jharp,

    I don’t support the Bush Administration’s rampant spending, except for defense. McCain’s opposition to earmarks and unrestrained spending is one of the few things I really like about him.

    DRJ (c953ab)

  111. I don’t support the Bush Administration’s rampant spending, except for defense. His opposition to earmarks and unrestrained spending is one of the few things I like about McCain.

    Comment by DRJ — 10/8/2008 @ 4:57 pm

    First, please, McCain’s opposition to unrestrained spending. McCain voted with the Bush administration 90% of time for God’s sakes.

    Second, the earmarks, which aren’t going away no matter who wins, don’t amount to a hill of beans. (less than 2 months of the cost of the Iraq occupation)

    jharp (2282bb)

  112. One might suspect that Barack’s additional $800,000,000,000 – $1,000,000,000,000 in new spending might concern you.

    Comment by JD — 10/8/2008 @ 4:50 pm

    I keep hearing this number. You got anything to back it up.

    So far what I hear from the Obama camp is ending the $12 billion a month war and slight increases in taxes on the wealthiest. Back to like they were in the 90′s. And we all know how bad things were in the 90′s, right?

    And cutting taxes on the middle class.

    I favor all three.

    jharp (2282bb)

  113. And one more quick question for DRJ and JD.

    In watching the debates I haven’t heard McCain mention the middle class even once.

    Though I will admit it did come up that he has promised to tax the health benefits of employer sponsored health care plans.

    What is it he is promising the middle class that turns you on so much?

    jharp (2282bb)

  114. Jharp, the McCain health care plan is actually a lot more promising than anything I’ve heard Obama talk about. And the Obama campaign’s characterizations of it are a bunch of BS.

    I say that as someone who (with reservations) wants Obama to win. McCain’s health care plan is the best thing he’s got to offer. Unfortunately, it’s not something his base is focused on.

    You can read about McCain’s health care plan here.

    Phil (3b1633)

  115. jharp

    I’ve been in some form of construction or agricultural construction building vineyards, avocado orchards, lemons, leveling, irrigating constructing orchid/gerber daisy greenhouses my entire life.
    I currently manage multi million dollar residential construction and at times provide skilled and semi skilled labor to fill in the gaps between what the subcontractors have excluded and what needs to be done to facilitate the job.

    My anecdotal experience shows me a ton of subcontractors who are great at their craft and crappy at business.
    The thing they get wrong more often than not?
    Taxes.
    On the business front I encourage people with more than 10 employees to use Paychex or someone similar. figure out their tax burden and realize that money belongs to the IRS and pass that cost along to the owner via hourly wage charges.
    My subs need to make money to do a good job, but they need to do a good job to make money.
    That part they usually get.
    Some of the subcontractors do really fine work. I need them to provide the quality multi million dollar clients expect.
    Some of them are bad at business, so here is how I counsel them…

    Once I get them to detach themselves from payroll, social security and unemployment and disability and offset the risk of making a mistake in calculation that brings a penalty by outsourcing it out of the mom and pop shop to Paychex or its equal, I remind them that all the money that comes into the business isn’t theirs.
    I remind them to turn their accounts receivable quickly and keep the cash flow going. Pay themselves a reasonable salary and cunsult a professionsl to determine that salary.
    I will guide subcontractors who do high quality work towards what they should be charging to be competitive even if that means raising their price. I have an interest in their success because then I can deliver the high end product world renowned architects and clients demand.

    People tend to think that rich people buy and pay no matter what the price is.
    People see a construction price for a home of $20,000,000 and think that everyone that worked there got rich.
    The truth is that many of those subs who worked there got a personal Social Security income tax of 12.4% on April 15. Some got hammered with by taxes for finally making some money and have not put away enough to cover it all.
    So then they raise their prices too high. The rich can handle the trickle up taxes only so far, so they stop buying… because due to higher taxes, the wealthy do not have as much to spend (trickle down theory meets trickle up on the graph)

    Bottom line is that I have seen business failures due to increased taxes. I have seen wealthy customers refuse to buy because of tax costs that are passed along in the final price.
    Higher taxes on small construction businesses (8-100 employees) will absolutely cause trouble. I can’t speak for much larger companies, as we try to work with hands on quality subs with quality more important than production.

    FYI, my gross sales for a year have been in the 8 figures in days past, but I found those extra millions in gross sales to be alot more work for very little return

    Rip away.. in the words of John MCcain “my friend”.

    SteveG (71dc6f)

  116. And the worst group in the history of the earth, George W. Bush and the Republican Party still has support from folks who call themselves conservatives.

    Go figure.

    Comment by jharp — 10/8/2008 @ 4:26 pm

    He doesn’t have _my_ support on that particular issue.

    CW Desiato (614aa7)

  117. jharp

    That middle class talking point from the left intentionally neglects the three times McCain specifically references the middle class by name.

    Tax increases hurt the middle class indirectly in my business, because the buying habits of the truly wealthy change. Instead using their profits or capital gains to hire craftsmen and trades people, they pay taxes with that money instead. So quality trades people sit at home with a skill that is no longer in demand and draw unemployment. Nice. The trifecta comes into play when they see the writing on the wall, draw unemployment, claim a back injury for the disability and then work under the table for cash to avoid “the man”.
    Kudos to Obama’s team for torpedoing the personal custom home building industry

    SteveG (71dc6f)

  118. The last time the Feds raised taxes specifically on the rich was the Luxury Tax pushed by George Mitchell of Maine (Sen. Maj. Leader).
    The yacht building industry in his home state, and many others, shut down, throwing thousands of skilled craftsmen out of work. In fact, in auditing the +/- of the Lux-Tax, it was found that the Fed costs of unemployment insurance to workers displaced from the yacht industry, far outpaced the tax revenue from the sale of yachts.

    The tax also virtually eliminated the General Aviation industry, shutting down assembly lines across the country.
    The sales of luxury vehicles was also impacted, though by not as great. The luxury tax kicked in, at that time, on cars costing more than $30K.

    One unintended consequence, was the increase in the desirability of SUV’s.
    The Luxury Tax virtually created this market since Suv’s are considered trucks, and were exempt from the tax. Suburbans suddenly started sprouting luxury touches such as leather upholstery, and electric windows/seats/etc. Things that were never offered in previous years.

    This was all at the same time that the aforementioned Sen. Mitchell adamantly opposed any reduction in the Cap-Gains tax, and investment in manufacturing and other business activity just dried up causing the slowdown in 91-92, and giving the election to Billy Jeff…
    It’s the Economy, Stupid!

    Another Drew (db2f44)

  119. You can read about McCain’s health care plan here.

    Comment by Phil — 10/8/2008 @ 6:45 pm

    Just curious, Phil.

    Why would you link me to a Wall Street Journal Opinion article when John McCain’s website spells his plan out just fine?

    I am an educated man and you sir, are a phony.

    McCain’s plan sucks for everyone except the insurers.

    jharp (2282bb)

  120. Rip away.. in the words of John MCcain “my friend”.

    Comment by SteveG — 10/8/2008 @ 6:54 pm

    It was nice for you to write such a lengthy response but not sure I got the gist of it.

    Sounds to me like everyone needs a lesson in finance.

    You are making it much more complicated than it is as I have many friends in a similar business.

    And to additional 3-6% tax on businesses earning more than 250K has a significant impact is crazy.

    It’s $5,000 out of $100,000. On profits.

    jharp (2282bb)

  121. “Tax increases hurt the middle class indirectly in my business, because the buying habits of the truly wealthy change.”

    Find yourself another customer just like I do.

    I can’t get how the wingers someone feel if they don’t make things peachy for the wealthiest that business comes to halt.

    Two things required to do business.

    Labor and capital. And neither one of them is going anywhere without the other.

    jharp (2282bb)

  122. My posts are showing up fast enough to suit me thus I’m outta here.

    But seriously, gents, the complete fictional argument sold to you by the GOP that we need to make the wealthiest even wealthier so the middle class can pick up a few scraps is utter nonsense.

    And you whiners about high tax rates please ponder this. Capital gains rates, where you sit on your ass and play with money that most didn’t earn for themselves in the first place (inherited), pay 15%.

    And working stiffs pay about 30%.

    You guys are shmucks and voting against your own best interest.

    jharp (2282bb)

  123. Please read OBAMA’s tax plan….It is not increase small business tax on business making 250K….It’s only increasing taxes on households with incomes of over 250K….this includes small business owner INCOME not revenues of small businesses……
    How many small business owners pay themselves 250K in a year….only the REALLY successful ones.

    jennifer (5f002b)

  124. Dammit, I am trying to go to bed, jennifer. Why does jennifer hate REALLY successful people?

    JD (f7900a)

  125. jennifer

    my disagreement with jharp is about how government defines “income” for small businesses. You seem to be someone who draws a wage or salary and is unfamiliar how the government views “income” of business owners.

    Most people I run into say “oh, that is a writeoff…” and I remind them that whatever that “writeoff” is still took money to buy.
    Things like equipment are a writeoff over time and the income needed for the initial purchase can be taxable.
    This scenario results in the business owner owing taxes for something he/she “owns” on the books, but come April 15th, real cash is needed to pay the IRS.
    I have owned businesses where I owed the IRS more than I drew in salary, which is really awkward when tax time comes up. Especially when all the accounts receivable are in the hands of very slow payers

    SteveG (71dc6f)

  126. my disagreement with jharp is about how government defines “income” for small businesses. You seem to be someone who draws a wage or salary and is unfamiliar how the government views “income” of business owners.

    Most people I run into say “oh, that is a writeoff…” and I remind them that whatever that “writeoff” is still took money to buy.
    Things like equipment are a writeoff over time and the income needed for the initial purchase can be taxable.
    This scenario results in the business owner owing taxes for something he/she “owns” on the books, but come April 15th, real cash is needed to pay the IRS.
    I have owned businesses where I owed the IRS more than I drew in salary, which is really awkward when tax time comes up. Especially when all the accounts receivable are in the hands of very slow payers

    Comment by SteveG — 10/8/2008 @ 10:22 pm

    Was watching Elvis on youtube and thought I’d drop in.

    I’m glad to hear you come clean that it is not Obama’s slight tax increase that troubles you.

    The depreciation changes you complain about you can thank Ronald Reagan for. My first year in business I got an investment tax credit that Saint Ronnie did away with.

    And as far as the A/R being in the hands of slow payers? It ain’t the governments fault. You need to be a little more choosy who you do business with.

    jharp (2282bb)

  127. I don’t know where he got his numbers but Karl Rove said today that even if Obama’s business taxes affect only the top 5% that is 663,000 businesses.

    In addition, this US Census Bureau report shows larger businesses have more employees. Of course, that’s not surprising but then it should also be apparent that there will be more jobs put at risk as a result of taxing those businesses.

    DRJ (c953ab)

  128. “And as far as the A/R being in the hands of slow payers? It ain’t the governments fault.”

    jharp you dishonest doorknob, he did not blame slow payers on the government. Read it again.

    daleyrocks (d9ec17)

  129. screw you jharp,

    in tough times I have to take jobs that in ordinary times I would pass.
    I do blame the government for taxing me on money that others control.

    That said, karma is a bitch jharp and good luck when times get tough and you wind up with the shitty client topped off with the IRS demanding taxes from “profits” earned from the non payer.
    I assume you will be blaming Bush

    SteveG (71dc6f)

  130. Commonsense tells eveyone that the more burdensome taxes are, the less likely you are to increase your tax burden.

    Truth is that in most businesses, the new hire is not profitable at first. On the job training costs money, production is slowed, but taxes and payroll liabilities keep on rolling.
    There is a point where it isn’t worth it.
    Everyone on both sides of the aisle should see and believe that there is a point where it is not worth it.
    Some doofus here was saying you just should hire someone for $50K who brings in $150K… when most new entry level jobs are guys hired for $10hr who don’t know shit and who do not provide a return for weeks.
    Faced with higher taxes and Obama health care, I’d opt out.
    Some of my construction brethen will take trained, capable illegals underground with them and work for cash instead.
    Again, Kudos to Obama for fucking up construction small business and driving that economy further underground.

    SteveG (71dc6f)

  131. Also harp, I worked in the 2000 dot com meltdown for several “bigtime” players.
    When their stock went from $100 to $2 crossing the new year I got hosed.
    My subs and materials guys worked with me. The IRS? Not so much.

    In the end it worked out OK and I got paid. Then the bastards at the IRS audited me… at which point the state of CA jumped in. They demanded over $20K… now. I hired an agent to represent me during the audit…$5K upfront plus expenses.
    Bargain.

    My guess is that small business owners are the most likely to have IRS liens now… before the increase.

    SteveG (71dc6f)

  132. SteveG,

    “screw you jharp,”

    Sorry if I was too callous. It’s just that I disagree.

    “in tough times I have to take jobs that in ordinary times I would pass.”

    We all do and I understand you need to fight and scrap and it ain’t easy. Been there.

    “I do blame the government for taxing me on money that others control.”

    You can change to a cash basis accounting. It’s what I do. There are pluses and minuses.

    “That said, karma is a bitch jharp and good luck when times get tough and you wind up with the shitty client topped off”

    Been there several times. I draw the line on cutomers that I don’t think will pay. I can sit on my ass and break even. No need to work to lose money.

    “with the IRS demanding taxes from “profits” earned from the non payer.”

    You do understand that a non payer becomes a deduction after time?

    “I assume you will be blaming Bush”

    Bush has mucked up my business plenty with the handling of the economy. And I try not to bitch about politics as it relates to my business. (except our lousy health care system I blame on republicans). I support the candidate I think is best for the country as a whole. It doesn’t matter how we got there what is important is where we are.

    Best to you in business. I know it isn’t easy. And I didn’t intend to be inconsiderate.

    jharp (2282bb)

  133. REVENUES and PRE-TAX PROFITS are not the same thing. No business is taxed on revenues. Every business is taxed on PROFITS. Profits are after all expenses paid. Revenues are total sales. So very few business owners actually take home over 250 grand of profits after paying all expenses.

    jason (87ceb8)

  134. jharp

    thanks

    feel free to be a partisan and an advocate, but please remember that I am not by definition your enemy. Your tone with me and mine with you affect our ability to dialogue constructively.

    good luck out there to you too

    SteveG (71dc6f)

  135. Wouldn’t it be nice if the Leftists were so fastiduous with terms like revenue, profits, and taxes when they go on their rants about record revenues for big oil companies?

    JD (f7900a)

  136. According to the lefty leaning Tax Policy Center, McCain’s plan would add $4.3 Trillion to the national debt, but McCain has promised to severely cut the Federal Budget except for Vet programs and seniors.

    Obama’s tax plan would add $3.3 Trillion to the national debt, but the lefty leaning Tax Policy Center conveniently forgets to mention Obama’s $1.5 Trillion in new programs that during the debates he had promised to implement. If you do the math, Obama will increase the national debt by over $4.8 Trillion while McCain will increase the national debt somewhere below $4.3 Trillion depending on who much he can cut the Federal government.

    JonF (8a63aa)

  137. So, would someone like to explain this?

    Looks to me like, under Obama, virtually no one sees any tax relief.

    Under McCain, it looks like many receive tax relief.

    How does that work?

    CW Desiato (614aa7)

  138. Comment by CW Desiato — 10/10/2008 @ 10:14 am

    It’s all in McCain’s proposed changes to the tax status of health insurance. By changing it from an employer paid benefit, to a taxpayer deduction, and providing individuals with a Health Care Allowance, the marginal tax rate for Middle-Class taxpayers will drop slightly, with the marginal rate for the top 1-5% increasing.
    McCain’s proposal involves a lot of individual choice which will effect the ultimate cost to the individual/family of their health care choices.

    But, of course, individual choice would be anathema to a Liberal Democrat, wouldn’t it?

    Another Drew (e6d3fc)

  139. McCain’s proposal involves a lot of individual choice which will effect the ultimate cost to the individual/family of their health care choices.

    But, of course, individual choice would be anathema to a Liberal Democrat, wouldn’t it?

    Comment by Another Drew — 10/10/2008 @ 10:24 am

    Oh, that dreaded individual choice! I almost lost my head for a minute.

    But seriously, is that chart a correct reflection of what people’s expected tax liabilities will be?

    CW Desiato (614aa7)

  140. Comment by CW Desiato — 10/10/2008 @ 10:29 am

    I’m afraid you’ld have to ask the author of the chart.
    I imagine it is his opinion of what will happen.
    Of course, we must remember, that Presidents’ Propose; Congress’s Dispose!
    So, no one will no with any certainty until the Ways and Means Cmte actually goes down to Slow-Joe’s Home Depot, and gets themselves “a round to-it’.

    Another Drew (e6d3fc)

  141. CW,

    I thought that study was interesting, too, and I posted on it here.

    DRJ (c953ab)

  142. #

    CW,

    I thought that study was interesting, too, and I posted on it here.

    Comment by DRJ — 10/10/2008 @ 10:43 am

    Thanks, DRJ. Excellent points. I’ll continue there.

    CW Desiato (614aa7)

  143. I just wish that in all of his eloquence of speech, Obama would make a statement that actually answers this question. He speaks like an airplane in a holding pattern, people watch in awe as he makes his circles, only with a plane you do know where it will land. To be thrust into a penalized position as a result of gross receipts will promote downsizing. If you employ people, you may just need to form more, smaller grossing companies. Heck, you might even get a credit if you play by his rules. Vote McCain, at least he’s trying to explain his ideas to us.

    Steve (1d42b7)

  144. 1.) First of all, I want to make some corrections about the example a few people have brought up where someone makes $300K now, and what will happen to them if Obama’s plan goes into effect. Since taxes are graduated, the $50K over the limit will pay an additional tax increase of say 10%. So then, if currently the tax on the that $50K is 33% or $17K, then 10% more means that this person will pay an additional $1,700 in taxes. Not $5,000, not $30,000, but $1,700.

    2.) I heard a few people mention S-corps and their tax rate. S corps don’t pay federal taxes. The owners do, but that doesn’t effect the business. You might argue, well Joe Shmoe is the owner of an S-Corp that made a “profit” of 1 million. (“profit” means that he personally got 1 million income on his personal tax return from the business.) So, now he pays an extra tax on the $750K excess, or $25K more tax than he would have paid before Obama’s plan. He may choose to lay someone off now to recoup that 25K. My response- bull crap. I will grant you that it is possible that even someone who makes 1 million per year is living paycheck to paycheck, and that extra 25K in taxes he has to pay will prevent him from paying his mortgage or car payment or whatever, and he’ll need to somehow come up with the 25K from somewhere. But that won’t effect his business. Why? If he could save 25K by laying someone off, he would do that anyway, regardless of his personal tax rate. In general, every employee of a successful company has a value of more than their salary, or else they wouldn’t be there. So if he lays off an employee to save himself 25K, the business now might just as easily profit less than $975,000, and so his loss is even more….

    tm (49c18d)

  145. Hey, I live off of what was my 401K, Obama wants more of that.

    Brian (e79177)

  146. How racist of those of you who dare to criticize Lord Obama! Shame on you! The “Messiah” spreads love and equality to all, and all you do is spew hatred towards the beloved one. Hades will await your arrival for your abhorrence towards the chosen one.

    Will (92f025)

  147. Well, at least we’ll know a lot of people there.

    Another Drew (1d7115)

  148. tm,

    I don’t have to talk theoretically. If Obama wins, my business will not expand and it will not replace an employee that is retiring soon. We could use the help but we will do without because of the uncertainty caused by Obama’s tax plans.

    You talk like someone who has studied business in college but hasn’t lived it. The consequences of most business decisions are not clear cut. It’s easy to run a business if the question is “Do this and make $5K” or “Don’t do this and lose “$10K” but it’s not that easy in real life. In the business world, almost every decision is a gamble and uncertainty is what affects business decisions the most.

    DRJ (c953ab)

  149. I own one of the many small businesses Sen. Obama was presumably referring to, and I was shocked when I heard his comment. Our business, for reference, is about $8 million in annual revenue and employs about 40 people. We’re taxed as a “Sub-chapter S” corporation, and many companies in our size range are taxed in the same way, or as an LLC., which is similar in important tax respects. I had imagined that we are one of millions of similarly situated companies.

    In our company profits go one of three places: taxes, owners or retained in the company for future needs. Our earnings are our only source of capital. Every single dollar taxed away from us reduces the return to the owners or investment in the future. As a practical matter, the owners are hanging around hoping to someday sell the company, and have never been able to take much out of the company over our fifteen year history. Every dollar we can reinvest, we do. Under Sen. Obama’s so-called plan, a big chunk of our profit will be taken from us by the government. That will reduce what we can use to hire new people, and considerably narrow our safety cushion for bad times. Banks don’t lend to companies like ours, so we must save.

    Sen. Obama has never been around a small business and has no idea how a business works, so he’s relying on a set of advisors to tell him what a small business is and what it’s needs are. His frightening ignorance emperils our company, our employee’s livelihoods and our country’s future.

    MTF (17058c)

  150. They should not be talking about reducing business taxes. THERE SHOULD NOT BE ANY BUSINESS TAXES IN THE FIRST PLACE, PERIOD!!!
    WE THE PEOPLE PAY ALL TAXES, PERIOD.
    We the people are the only ultimate source of ALL tax revenue. Since there is only one source of tax revenue, there should be ONLY ONE TAX to collect all tax revenue. It should be a single, simple, fair, direct, graduated, individual, full-income tax levied on living persons, for each level of government.

    Ron (95a1c5)

  151. Seems the comments by Obama supporters have little to do with the reality of owning a business. As a small business civil construction contractor with 5 employees and a great number of subcontractors, I cannot afford any more taxes.
    As a matter of fact, I returned Sunday from a business trip to Asia. I encourage all small businesses to take a look at relocation. We are.
    China is more capitalist in many ways than the U.S., and as I see it, the only way we will get real change in America is if the government has no more money to spend or can’t borrow it anyway.
    The way I see that happening is to stop producing wealth here and let it die.
    I do not think the country can actually be saved from itself without those who produce goods and services quitting, thereby removing the funding mechanism for all this madness.
    We all know that government cannot manage business or create wealth of any kind as they have not the skills for risk and profit. There never has been a government in the history of man that was able to do so. The parasite cannot exist without the host.
    Good day.

    johnz95 (e4f890)

  152. tm: The 1990 business tax increases in federal taxes put tens of thousands of employers out of business amd millions of jobs out of existence. The 1991 PA business tax increases put many thousands of PA employers out of business and tens of thousands of jobs out of existence, destroying much of PA’s business and industry. PA has never recovered. Don’t tell us that Obama’s tax increases won’ hurt.

    Eliminating all the existing taxes would remove them them from the price of everything – including government – and reduce the price of everything by one-third (1/3).

    Ron (95a1c5)

  153. dont worry about businesses. If you want to fake earnings in your company to receive bonuses, you will have an advocate in the whitehouse.

    ponyboy (2a9d7e)

  154. JD, your answer:

    EXISTING DEMOCRAT TAX BILLS

    45 TRILLION DOLLARS = Carbon credit Tax
    1 TRILLION DOLLARS = Charlie Rangel’s Tax
    845 BILLION DOLLARS = Obama’s To-The-UN Tax
    76 BILLION DOLLARS = Obama’s gasoline tax
    10 CENTS PER GALLON = Gasoline pump tax increase

    THIS DOESN’T INCLUDE TAX CUTS THEY WILL ELIMINATE!

    Ron (95a1c5)

  155. Hope for change, as in pocket change. That’s all you’ll have left after Obama pays for all of his social programs and his “energy plan” results in a large drop in supply of Oil reaching our country further increasing gas prices. Hope is wishing that you can afford that brand new $30,000 plus hybrid that’s going to save you $$$ one day if gas exceeds $5.00/ga. Obama believes that even those who pay no taxes should get a break too, McCain believes that if you already pay taxes you should pay less. Neither has a desire to simplify the tax code, hence my frustration with each. Amazing that in a country of over 300M people that these are the best two candidates that we come up with -Hope indeed.

    BigMAC (3f381c)

  156. ponyboy, given the number of prosecutions that the Bush administration has engaged in over the last eight years, that is just a stupid slander.

    SPQR (26be8b)

  157. Please Tell me, how many poor or low income people EVER gave someone a job? There are 2 Things that the Government can do, Get in the Way or Get out of the Way!

    John Wilkins (1b96b9)

  158. It’s a tribute to our businessmen and entrepreneurs that they can succeed under the burdens of our ridiculously complex, convoluted, and divisive income tax system.

    Our politicians have composed and constructed thousands of pages of income tax policies, rules, etc. and have managed to avoid a clear definition of just what constitutes income. Filing a return often takes a team of experts and vast resources of time and financial assets just to come up with a supportable conclusion. The “right” answer is, more often than not, just an opinion. Countless tests have shown that, given the same data, separate IRS experts yield different results.

    A sports comparison might be expecting your favorite NBA or NFL teams to compete with constantly changing rules, variable points per score, and moving goals.

    How our tax system survives the constitutional test of equal protection and justice is a mystery.

    Just think what we, our businessmen and other entrepreneurs could do for our families, the economy, and our country within the context of a simplified, fair and stable tax system.

    It’s time for change. We need a fair, equitable and transparent tax and budget system. We the People need to oversee and control our employees, the Politicians’, behavior: not allow them to control ours.

    Considering the many knowledgeable opinions expressed here, I would appreciate your opinions and discussion of the Fair tax and other taxing options. Also, ideas on creating transparency in budgeting would be appreciated.

    Together we can accomplish anything. Please join the discussion. Please spread the word.

    Thank you.

    FiddlerBob (8c2b96)

  159. From much study and after listening to both the Drive-By media and more balanced media, let’s face it – we’re screwed if Obama and his Socialist cronies get full control of our government. He “says” he is going to “distribute the wealth more equitably”. Hello???? Has anyone bothered to read the different manifestos of the Communist/Socialist/Marxist systems? Hello??? A little time spent on your part with a little bit of research and a little bit of time spent watching some TV other than the usual sit-com fare and you would have seen that Pelosi and other of Obama’s cronies are ALREADY calling for another session of Congress so they can pass some more bills – to re-instate the ban on drilling, to decide how much more they’re going to give the people that are too lazy to go out and find a job, how much more they’re going to give these people that keep having illegitimate kids, how high they’re going to raise taxes on the hard-working every day citizen, etc. etc. etc. Where is that money going to come from??? You got it, from YOUR’S and MY taxes – for those of you who actually pay taxes. For years, when I taught school, a full 57% of my monthly pay check went to taxes. I don’t teach any more, but I still pay over 38% in taxes PLUS insurance, etc. I don’t know about you, but I can NOT afford to pay for Obama’s “new tax plan” and I don’t feel that I should HAVE to.

    Frustrated in JAX (2a0b0a)

  160. What is wrong with John McCain? Why doesn’t he come to the debate(s) armed with numbers from the SBA and blow Barack Obama’s claim(s) out of the water?!?! Senator McCain isn’t getting coached well at all. In fact, I thought he was a head-strong type who took pride in leading the charge and not being coddled by “handlers”. Actually, I’m beginning to think that Senator McCain WANTS to lose now. He’s getting tired from the campaign stops and is coming to the realization that being President is even more grueling.

    Shaun B. (b5930f)

  161. We’re drowning and Obama throws us an anvil.

    Obamas A. Nazi (d4ab96)

  162. Obama’s “Hope and Change” message is being misinterpreted by most people. When he and the economics democrat genuises in Congress get done with your small business hope and change are all you’ll be left with (hope, nickels and dimes). Don’t forget Obama has a bill waiting in the wings to send 920 billion in aid (via taxes) to the poor around the world – that’s after they finish spending 700 billion to fix the ACORN mess they created with Fannie and Freddie

    Agustin (4f1ef8)

  163. Question: Why are businesses (or corporations) taxed at all? Corporations do not “make money.” Any money made by a corporation, small or large, is either re-invested in capital improvements or inventory, paid out in salaries or bonuses (where it is taxed as income for those people), paid out in dividends to stockholders if there are any (where it is taxed), invested in the stock of other businesses, or placed in the bank as a cash reserve for tough times. There should be no Corporate Taxes at all.

    BenF (ecc542)

  164. #163 BenF:

    Question: Why are businesses (or corporations) taxed at all?

    Well, in a logical world, they wouldn’t be.

    But in the “real” world, they are a faceless entity that is easy to describe as “them,” easy to ascribe “evil” to, easy to rouse partisan hatred against.

    And it isn’t just Democrats who use that device, but they are currently the foremost practicioners of it.

    On a personal note, been awhile since I’ve run into you out and about on the Innernuts~good to see you.

    EW1(SG) (52dba6)

  165. Why do we have to be so unpatriotic? Come on; Give it up for your government. We can squeeze out just a little more to support and or contribute to our socialistic president elect whims. JB’s (Socialist VP elect) opinion of you is that if you don’t give till it hurts you are less than worthy to live in his society. Lets not be party pooper racists, hell bent on controlling the much needed spending. Be part of the New Party!

    There is no joke or mystery in what the Obama liberals want to do to this country.
    It sickens everyone who is not left. We must do everything in our power to resist

    TV2 (a46d10)

  166. Wow — not surprising. You have a bunch of greedy liberals responding to this. Liberals are nothing other than a bunch of THUGS. They steal money from people who work and sit on their butts accepting checks so they can go out and lobby congress for more theivery.

    You make me sick!

    Denise Foote (e71724)

  167. I’ve purchased a rifle and scope for the first time in my life. My two shotguns will have plenty of ammo. Liberal/fanatics will riot if Obama loses, and they’ll come after those of us not on their side if they win. No wonder the United States is not mentioned in the book of Revelation, come armegedon time. We will be insignificant by then!

    mark vuchetich (d7d71b)

  168. You racist calling people are idiots!! I run a small business and have many black employees. I tell them, hey, if Odumbazz raises my taxes you loose your job to cover it! Then what are they going to do, vote themselves out of work! Idiots I tell ya! You want to know what is racist, 96% of blacks voting for the black! That’s racist! Simply pointing out facts is not racist! truth hurts doesn’t it.

    John (318f94)

  169. Couldn’t make a living staying small. Couldn’t have a life as the business got bigger. In the end, consumers made the decision to terminate operations and shut down an easy one. I understand why the rest of the world hates us. It seemed that at the end, horrible consumers, came in too often in one of two forms. They were either 150 lbs A-holes or 6′ 2″ puds with ears. I suspect they were all Obama supporters.

    Ed (344b5a)

  170. This thread seems to have attracted some odd ones.

    SPQR (26be8b)

  171. The true definition of fair in regards to tax policy: Total U.S. budget for the year (approx. $3,000,000,000,000) + Total debt owed (approx. $10,000,000,000,000) / Total number of U.S. citizens (300,000,000+) = Your FAIR share.

    So: $13,000,000,000,000/300,000,000 = $43,333.33 owed per U.S. citizen. Please make your check payable to U.S. Tax Service, 2008, or you will go to jail (both parents are fully responsible for their children’s tax liability until each child is 18 years old. If you don’t know who the Dad is, you owe it all, otherwise you each owe half). We’ll let you know how much you owe next year, unless your Representatives spend more of your money this year, in which case we will be calling you sooner.

    Now, if you don’t like this definition of absolute fairness, we can go forward with the discussion by asking the generous working people of our country to help offset some of your share by paying more based on their income, but they don’t want to pay your whole share. We should be very appreciative of their generosity given that they have worked hard to EARN their money.

    Maybe it’s time WE THE PEOPLE kicked some Congressional Asterisk’s and reigned in these liberal spending yahoos.

    LogiCal (b06d38)

  172. Although the discussion is quite interesting, you are all making this much more difficult than it has to be. Think about the basic economic concepts of supply and demand. It is elementary that when costs increase demand decreases. What is an income tax but a cost on generating income? Therefore, as taxes on income increases, in other words the cost of earning an income goes up, the demand for income goes down.

    Tax policy is not enacted in a vacum. People react. (See the Luxury Tax) Ronald Reagan, John F. Kennedy, and George H.W. Bush have one thing in common besides all being President: They were all Econ majors. But, Reagan had far more in common, at least economically with Kennedy then he did Bush. Reagan and Kennedy were trained pre-WWII, but Bush was trained after and accepted far more government involvement in the economy. Kennedy, as did Regan, fought for and won a large tax cut. Kennedy said, “the paradoxical truth about taxes is that the surest way to raise [government] revunes is to cut tax rates.” If this sounds like supply side economics to you, that is because it is.

    Moreover, with asking just a few questions, I can demonstrate that you argee with supply side princples. If the tax rate is zero percent, what will government revenue be? Obviously, revenue would be zero. If the tax rate is one hundred percent, what would government revenue be? If you are tempted to say everything, think for a moment. Would you continue working if someone took everything you made? [I suppose if the entity, in this case government, provided everything you need, you may continue working. (This brings to mind Gerald Ford's warning about big government: "Any government big enough to give you everything you want is also big enough to take away everything you have.)] Most people would stop working. Therefore, although the government might confiscate everyting for a short period of time, it would not be long until there was nothing to take becasue people would quit earning an income. Therefore, a tax rate of one hundred percent would result in no revenues to the government. In order to avoid supply side implicatioons, one would have to accept the illogical argument that government revenues would continue to climb, i.e., people would just accept greater income tax rates without reacting, until the tax rate hit one hundred percent. In reality, the only logical conclusion is that there is some ultimate rate which maximizes revenues. We have yet to find that point because each time we have had a significant federal tax rate cut federal revenues have increased greatly indicating that rates, prior to the tax cut, were still far too high.

    So, you may be wondering, with higher revenues after the Reagan tax cut, why did we the deficit continue to increase? The answer is that the democrat controlled congress spent an additional $1.50 to $2.00 for each additional dollar of revenue. Think about your own family budget for a moment: If you exercised some option you have to increase your family income which worked, but your spending increased by significantly more than the additional income, as your finaical problems mounted, would you say you had a revenue problem or a spending problem? I beleive you would have a spending problem. I believe that to be true of the federal government as well.

    In a capatilistic society, the tax code should have one goal: to raise the funds sufficient to run the government in the most efficient manner possible with no surplus. Therefore, we need to stop using the tax code for social engineering. Moreover, there should be one flat rate. (As you are all likely aware, a progressive income tax is second only to abolishment of private property ownership in the goals of Karl Marx as put forward in his Communist Manifesto.) In a capatilistic society, no one should ever be punished with a higher tax rate for earning the next dollar.

    Cato

    Cato (cee147)

  173. I’ve read a few of the comments here and am very disappointed with the stupidity of some of the comments. In particular, the first one is obviously a Nobama idiot. When you don’t understand something or don’t want the truth, you label it racist. Grow up and pull your own load. Now let’s explain something. The lefties have been using the mantra “failed Bush policies” ad nauseum. Let’s ask what are some of the failed policies? If you mean the tax cuts, remember that to a lefty, “investment” means tax increase. Comprende pas? Next, let’s visit the loan debacle. This cesspool was started under Jimma Carter from my state. I never voted for the idiot for anything. Under Slick Willie’s infamous joke of an administration, banks were browbeat into loaning money to vagrants, bums & other types that couldn’t pay for a low-rent hotel. Others entered into loans for high priced houses or bought mulitple houses to flip & be rich. You also had the “greed factor.” When the houses values fell we had a mess. John McCain wrote a letter to the lefties indicating that this was a time bomb. All of the lefties that got sweetheart loans, money under the tables, etc. said nothing is wrong. I fault this whole mess on the lefties. They should be impeached, kicked out of Congress & thrown into prison. Nobama must be accountable for his part in this. Lastly, his tax policy which is not his but his “keepers” or the leftists behind the curtain want to bring us into Socialism with a Communist flavor. He is very dangerous in many ways. Besides, I wouldn’t trust him to manage an ice cream stand. He has no experience with anything other than leftist programs. You can dress a thug in a suit, & you still have a thug.

    Edward (9e81a3)

  174. Hello,

    Real simple – Don’t elect Obama – No taxes.

    Thank You

    izoneguy (15ce3b)

  175. I think it’s either very hilarious or very sad (or both) that virtually all of the comments here using the term “racist” appear to be sarcastic comments from sympathizers of the author’s opinion, yet numerous other sympathizing commenters have reacted with great anger at these “race-baiting liberals” and “Commie leftist Obama worshippers.”

    Perhaps this blog should have a clear no-sarcasm policy…? If followed and enforced, it would certainly make these discussions easier to follow.

    spycake (ba590a)

  176. This post is idiotic. The $250K refers to individual incomes, not business receipts. If you don’t understand the difference, and you clearly don’t, you shouldn’t be putting your ignorance on display like this.

    Further, many small businesses that do have profits over $250K have multiple owners. You only face a tax increase if your share is over $250K.

    Stop spreading BS.

    toad (50cf1c)

  177. Comment by toad — 10/16/2008 @ 10:29 am

    Can you please provide links to the campaign “White Paper” that explains these principals of the Obama Tax Policy?

    ***I won’t be holding my breath***

    Another Drew (6ac001)

  178. Sorry, “principles” not “principals”.

    Another Drew (6ac001)

  179. Looking at the wording, the statement says receipts, meaning before deductions. Depending on the industry, the profits vary widely. In most industries, a $250,000 business may have a 5-10 percent profit. In the industry I work in, the food sector, it is less than 3%. If Obama taxes at the receipt end, an industry of $250,000 will be taxed at 35% according to his statement at the 3rd debate and on the standard report. 35% of 250,000 is 87,500 before business expenses which are already taxed (employee wages, sales tax, property tax, etc). The business owner will have half of the gross receipts paid out in income tax. The result, closed businesses, lost jobs, higher unemployment, more people without health insurance, etc. If you can take the business deductions out such as cost of good, utilities, building expenses, employee wages and taxes, so forth; the business owner has very little left in profits. The business owner carries a small margin to work with, the empoloyee goes to work and collects a fair wage based on industry standards, cost of keeping the business in place. There are many more expenses than the wages going out that keep businesses going. Wages are one. Taxing the small business is not hte answer any more than having every person have a health insurance they think they will get given to them by the government, no chioce, and coming out of their taxes. You still pay it, but you will pay it in lump sums on April 15.

    accountant (9516c2)

  180. I stand by my belief that Obama will attempt, with the hearty endorsement of the Ways & Means Cmte, to introduce a Gross Receipts Tax on Business.
    It has been a bedrock of Liberal belief that businesses are greedy, insensitive, destroyers of the environement, social structures, and all that is good and just in the World, and that they can “afford” it.
    This will be sold as “fair”, probably throw in “for the children” too.
    If I’m mistaken, I will be pleasantly surprised,
    and happy to see that my business will not be saddled with an unfair tax.
    If it happens, just remember who told you so.

    Another Drew (6ac001)

  181. I think what BHO is trying to say is that no small businessman/woman will make more than $250K because he will not allow it.

    Just see how long it takes that $250K number to be lower.

    Jack H (cf2895)

  182. How else do you think he’s going to “end middleclassness” (from his “former” church’s website).

    By destroying the jobs that the middle class has.

    Obama is perhaps the most radical, dangerous candidate the socialists have ever put forward. he believes similiar things to Kerry, and Gore and Clinton… the difference is he’s HIGHLY charismatic snake oil salesman.

    Morris (0a8e03)

  183. What does racism have to do with taxes?? That was a rediculas statement. I am so sick of EVERYTHING leading back to the color of someone’s skin. Get over it.

    Lynn (df563c)

  184. the statement says receipts, meaning before deductions

    What statement?

    toad (50cf1c)

  185. And how can you support republicans then after they just shattered the record books on deficit spending?

    $5 trillion for God’s sake. That’s some record they’re running on.

    Both parties spend. The GOP borrows and spends. At least the democrats pay the bills.

    The national debt when Bush came into office was already >$5trillion – it’s now >$10trillion and increasing faster since the Democrats ‘drained the swamp’ in 2006. They control the senate and the congress and chair every committee – yet our debt has increased ~18% in the last 2 years alone. They could vote down every spending increase if they wanted but instead went in the other direction.

    David (16eef3)

  186. As a small business owner who will be affected by Obama’s tax increase on small businesses, let me tell you that my business makes well over $250k and let me tell you that I work my butt off every single day making sure that I continue to pay my employees salaries, which is not always the easiest thing to do… especially when the credit market is completely locked up.

    In times like this and with the shape our economy is in a tax increase would simply hurt our businesss. I understand people think that small businesses are making lots of money and profiting off of the middle class person but it’s actually the other way around – the middle class is working because of the existence and power of small businesses in America. Take that away and our economy will continue to head in the wrong direction and small businesses will continue to go our of business.

    An Independent Voter (4804f6)

  187. hahahahaa!!!!! FOR ALL YOU WHO ACCUSED this article for being racist! Is this the only card you have to play?!?!?!?! Do you not see the facts!?!?! If Obama was Caucasian you wouldn’t have a leg to stand on with such an audacious accusation! Don’t worry, if Obama wins you’ll find out hard, especially if you work for a company that makes over 250k and they don’t get tax cuts- they get increased HARD B/C of liberal leftists like your selves who voted for him (calling people racist) and that company fires you b/c they can’t afford it…… then you’ll know.

    april w (88eb26)

  188. I cannot believe any of you think that it is racist for someone to criticize a TAX plan.

    Many of you seem to be forgetting that many small businesses are service-oriented, and not economically-oriented. Not everyone is out to get minorities.

    Kellye (523342)

  189. Welcome to the running joke, Kellye…

    I’d explain it, but I’m having too much fun laughing at you…

    Scott Jacobs (2899a7)

  190. Kellye is clearly a racist. april w too.

    JD (008a90)

  191. Crowd: “You’re a racist.”

    Person: “No I’m not…”

    Crowd: “Only a racist would deny his racism!”

    Person 1: “Ok, then I’m a racist…”

    Crowd: “See? He ADMITS IT!!!”

    Scott Jacobs (2899a7)

  192. That was good, Scott. If you did not have a bowel movement while watching Baracky Tuesday night, you are a racist. I know because a troll told me so.

    JD (008a90)

  193. The US Small Business Administration (SBA) defines a “small business” according to its average annual receipts or the number of its employees.

    I’m confused about something.

    Annual receipts to me means amount made before expenses. Could be wrong though.

    I do know that when Obama talks about “$250,000″ that is net amount made by a business subject to tax.

    Help me clarify please.

    Oiram (983921)

  194. #193, millions of Americans, and quite a few others, voted for Obama without having a clear understanding of just what level of financial activity would trigger increased taxes. If you did too, why is a question worth asking yourself.

    Ropelight (1c7bd1)

  195. I have a clear understanding on Obama’s plan. But I wasn’t questioning that rope, I was questioning the way Small Business Association comes up with it’s figures.

    Read the original post here again, it is important to Obama’s statements.

    Oiram (983921)

  196. I do know that when Obama talks about “$250,000″ that is net amount made by a business subject to tax.

    You want to believe that, but nothing in Barack’s plan says that. All there is to go on is his statement that businesses that make $250,000 or less … You assumption as to what he means might very well be valid. But given the information available, those that consider make to be gross revenues could be right as well. His “plan” left out the details.

    JD (008a90)

  197. #196 JD, you mean to tell me you need Obama to tell you that his $250,000 per year is the net amount?

    Wow

    O.k., well that explains a lot.

    I’ll start protesting when our government starts taxing us on total registered sales without taking into consideration expenses, overhead, employees etc.

    Maybe you should take another look at Obama’s tax plan JD with that in mind.

    Oiram (983921)

  198. #196 Sorry to harp JD, but I’m still dumbfounded on your comment, only because I know your smarter than that.

    You mean if a business has an overhead of 80 percent, you expect to hear that it actually should be in the $1,000,000 bracket because of gross sales? As opposed to the $200,000 bracket?

    Wow, seriously keep an open mind on Pres Elect’s tax plans.

    Oiram (983921)

  199. No response JD?

    Oiram (983921)

  200. Sorry JD, just saw that you got your hands full with the racist cardists.

    For the record, I know your not a racist.

    Oiram (983921)


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