There was a lot of talk about "Joe the plumber" at tonight's debate.
Well, I did a bit of research and discovered this:
- Barack Obama's tax plan will tax the 5% of businesses that have revenue in excess of $250,000.00 a year
- The higher tax rate will apply ONLY to the part of the revenue that exceeds $250,000.00 per year
- Did I mention that ONLY 5% of businesses have profits that exceed $250,000.00 per year!!
- In the case of "Joe the plumber", he's planning to buy a business that generates $250,000.00-$280,000.00
- The current tax rate of 36% would apply to the first $250,000.00
- Additional earnings would be taxed at the higher rate of 39%
- Banking my figures on the high end ($280,000.00) the tax difference for "Joe the plumber" under Obama's plan would be:
$900
Seriously???!!!
John McCain made "Joe the plumber" a major campaign issue over $900???!!!
Give me a break...
Source: Political Punch (ABC)
John McCain made "Joe the plumber" a major campaign issue over $900???!!!
Give me a break...
Source: Political Punch (ABC)
NOTE:
So... Several people have written to me about the difference between "profit" and "revenue". To this, I can only respond: this is why I studied theology and not economics. I can handle figures, but I must admit that I really don't understand the kind of complex economics that are necessary to successfully administer a small business.
What I do understand, on the other hand, is justice. Though my numbers are probably wrong from any actual administrative point of view, my point remains the same - if your business is generating $280,000.00 a year in profit, then suck it up and pay your extra $900 in taxes. It's for the good of the community.
As my brother reminded me, even that can be self serving. If your $900 in extra taxes makes the quality of life of the actual middle class stronger (God help us if we actually start talking about helping the POOR!), then that will actually help the wealthy, too! When the economy is stronger and when there is a stronger middle class and fewer people in poverty, then they're all more likely to actually CALL a plumber when they need one, rather than letting problems wait or fixing them for themselves.
"Trickle down economics" has been proven to be a fallacy. But let's start talking about "trickly UP economics". Help those who NEED the help, and the wealthy will have their day. I guarantee it!
What I do understand, on the other hand, is justice. Though my numbers are probably wrong from any actual administrative point of view, my point remains the same - if your business is generating $280,000.00 a year in profit, then suck it up and pay your extra $900 in taxes. It's for the good of the community.
As my brother reminded me, even that can be self serving. If your $900 in extra taxes makes the quality of life of the actual middle class stronger (God help us if we actually start talking about helping the POOR!), then that will actually help the wealthy, too! When the economy is stronger and when there is a stronger middle class and fewer people in poverty, then they're all more likely to actually CALL a plumber when they need one, rather than letting problems wait or fixing them for themselves.
"Trickle down economics" has been proven to be a fallacy. But let's start talking about "trickly UP economics". Help those who NEED the help, and the wealthy will have their day. I guarantee it!
Comments
I suspect the $900 is still more than Joe will have to pay. Let me explain.
I would like to point out that revenues are not taxed, net profits are taxed. A business would have to net $250,000 after expenses before it was subject to Obama's tax. That means that Joe the Plumber would have to be taking more than $250,000 home before he saw his taxes go up.
Let me illustrate. If a business has revenue of $1 M but expenses of $2 M it has a loss of $1 M. This business is not taxed on its $1M revenue but rather gets a tax credit to carry forward of $1M. However, if this same business has a gross of $1M and a profit of 10% after he paid for his employee's salaries, his trucks, his real estate and all his other expenses (this would be a healthy profit for Joe's plumbing business)Joe would still only be paying taxes on the $100,000 net profit that he took home. In this case Joe actually gets a tax cut under Obama's plan