Obama vs. Plumber

[Alan®]

Your math is way off here again. Impossible? Lets see a hypothetical example:

There are 100 small businesses
95 of them make 100k/year
5 of them make 3.1mil/year
Average profit of all small business: 250k
95% of them make less than 250k

Am I saying these numbers are the real numbers? No
Is it possible that 95% of small business make less than 250 if the average owner makes 250? Sure, it just depends on what the actual numbers are, so until you can prove otherwise, I am inclined to believe the numbers at face value.

Think about it this way...you don't have a hard time believing that 5% of the population pays 95% of the taxes...Very large or small numbers can skew averages way off from what you might think.

Eh. I guess you're right but I just have a hard time believing that out of 5 million small businesses only 5% are doing well enough to support half the jobs in this country. You're talking about 250,000 businesses making up for 4.75 million basically tiny businesses. I can see where you're coming from but at the same time you see what I'm saying?

[joecoolfreak]

Eh. I guess you're right but I just have a hard time believing that out of 5 million small businesses only 5% are doing well enough to support half the jobs in this country. You're talking about 250,000 businesses making up for 4.75 million basically tiny businesses. I can see where you're coming from but at the same time you see what I'm saying?

Yes I do see where you are coming from. I don't think you understand at all how businesses, or more importantly small businesses are taxed.

Let's do another hypothetical.

A small business employs five people and is an S Corp and the owner uses personal taxes to pay the income tax instead of using the corporation. Keep in mind that this is very simplified for the purposes of illustrating a point.

This business grosses 1mil in revenue(money brought in). Let's also assume that the business provides a service, not a product for simplification. Let's say that each employee makes a set salary of 150k. They are all taxed indivdually on their own taxes and since they are less than 250, the taxes under an Obama plan do not go up.

150x5=750k

This is already taxed, so it is deducted from the 1mil in profits. Let's assume that there are no other deductions that are possibly (highly unlikely).
That means that the owner will claim 250k and pay personal taxes as such.

No taxes are raised with the plan in question.

Lets assume that company makes 1.1mil the next year and no one gets a raise.

that means that the owner now makes 350k for the year.

His taxes will now go up, but he shouldn't have to fire anyone. Nothing will adversely affect him, except that instead of 350k the next year in his take home pay, he will pay 3% or so higher in taxes.

1st year, he paid 90k in taxes and his actual take home was 160k
2nd year, his company made more bumping him over the 250k mark, so he will pay 136.5k and his take home will be 214k.

How has this new plan hurt him? Why would he have to cut back on anything. If he can live on 160 the first year, taking home 214 the second year doesn't hurt either?

Now, back to the original point, how much does this small business get taxed on? 250k

It is a profitable business that employs 5 people. As he grows, the more people he hires, as long as he doesn't increase his own personal salary, his companies taxable income doesn't grow.

[4dmin]

Yes I do see where you are coming from. I don't think you understand at all how businesses, or more importantly small businesses are taxed.

Let's do another hypothetical.

A small business employs five people and is an S Corp and the owner uses personal taxes to pay the income tax instead of using the corporation. Keep in mind that this is very simplified for the purposes of illustrating a point.

This business grosses 1mil in revenue(money brought in). Let's also assume that the business provides a service, not a product for simplification. Let's say that each employee makes a set salary of 150k. They are all taxed indivdually on their own taxes and since they are less than 250, the taxes under an Obama plan do not go up.

150x5=750k

This is already taxed, so it is deducted from the 1mil in profits. Let's assume that there are no other deductions that are possibly (highly unlikely).
That means that the owner will claim 250k and pay personal taxes as such.

No taxes are raised with the plan in question.

Lets assume that company makes 1.1mil the next year and no one gets a raise.

that means that the owner now makes 350k for the year.

His taxes will now go up, but he shouldn't have to fire anyone. Nothing will adversely affect him, except that instead of 350k the next year in his take home pay, he will pay 3% or so higher in taxes.

1st year, he paid 90k in taxes and his actual take home was 160k
2nd year, his company made more bumping him over the 250k mark, so he will pay 136.5k and his take home will be 214k.

How has this new plan hurt him? Why would he have to cut back on anything. If he can live on 160 the first year, taking home 214 the second year doesn't hurt either?

Now, back to the original point, how much does this small business get taxed on? 250k

It is a profitable business that employs 5 people. As he grows, the more people he hires, as long as he doesn't increase his own personal salary, his companies taxable income doesn't grow.

exactly ... i just don't see where so many people think raising taxes on upper 5% of america will reduce jobs . slow economy reduces jobs personal taxes... if thats the case then someone needs to get an cpa b/c obviously they are doing something wrong.