Featured Post

30 Do’s And 20 Don’ts In Starting A Small Business

Small scale businesses are easier to set up compared to the middle or large scale businesses that require more time, feasibility reports, ad...

Tuesday, October 28, 2008

Joe The Plumber & The Small Business Tax Issue

When it comes to taxes this election and Obama vs McCain ... just what does it mean to be "Joe The Plumber" or any small business owner for that matter?

If the problem we have in the country is a lack of jobs (unemployment numbers have been increasing, but this is one of many issues), should we be increasing the taxes of the job producers (remember Small Businesses create the most jobs in the US)?

Most small businesses don't have the mythical $250,000 income (though they may make over $120k at which point McCain's plan would save them more in taxes). But most small businesses don't have any employees either. The small businesses that do have multiple employees likely fall into this category (250K earniners).

How much income should the business be throwing off before the owner is comfortable expanding their staff? Probably somewhere around 250k when you consider employee expenses (salary, taxes, insurance, etc), risk of a future downturn, and the owner's personal income?

If you're comparing with vs without Obama's plan, then the number is $250k. But if you compare how much better off you are with Obama vs McCain, then the number is around $120k (see link). For a two income family living in or around a large city, $120k isn't necessarily our economic elite.

It's also important to note that only Obama's plan adjusts personal tax rates, and then, only for people over $250k. All the changes in how much people pay are made with other tweaks to the tax code (which I always thought was too complicated even before we tacked on these new changes).

For McCain, it's done by increasing dependent exemptions, adjusting corporate taxes, more small business write offs, lower estate taxes, and another bandaid to the AMT. For Obama, he keeps the same tax cuts that McCain does except for people making over $250k, increasing the earned income credit, a new individual credit, a savings credit, and no taxes for the seniors.

If you're a small business owner, it's likely that more of McCain's tax changes will help you than those of Obama.

So for Joe The Plumber and all small business owners .... McCain is defintely who you and your wallet should be voting for.

No comments: