Comments on: Obama’s tax plan doesn’t hurt small business (Update #2)

By: Brian Angliss

Brian Angliss — Mon, 27 Apr 2009 19:23:45 +0000

Beats the heck out of me. There’s probably some benefit(s) that I don’t know about for corporations to incorporate as something else once they get to a certain size.

By: Jeff Huber

Jeff Huber — Mon, 27 Apr 2009 17:29:55 +0000

Why isn’t every business organized as an LLC?

By: Andy

Andy — Tue, 17 Mar 2009 15:22:05 +0000

Atleast Obama is finally helping small business’ now. His new assistance package ( http://www.savingtoinvest.com/2009/03/tax-breaks-in-obamas-15-billion-small.html ) will provide much relief – taxes in particular – to small business owners like me.

By: Andy

Andy — Wed, 12 Nov 2008 15:08:40 +0000

Ah yes. Show us concrete evidence that it’s all the democrats fault by quoting the national review. If you’ll notice, the only proof they point to is blocking drilling offshore or in ANWR. Otherwise it’s just basically filler saying how bad dems are. That’s generally what all conservative publications do. Two pages of filler bashing dems with about 3 lines of “facts” which can be dismantled just about as fast. In fact I’ve heard more conservatives talking about how good high gas prices are for the market, and that Europe has been paying these kinds of prices for a long time so we should suck it up.

The biggest problem with drilling here is that OPEC can just as easily offset our production by lowering theirs, increasing the price of oil back up to the levels they like, and since their market share would be less, they’ll have to increase it further than current levels in order to make the same money. The only person that wins is Chevron who gets to cut into OPECs profits for themselves. That’s better than nothing, but still doesn’t help the citizen one bit. Therefore, while we have this wave of public outrage, lets go ahead and make a major shift in the way we use energy that sets us up for long term prosperity and severs our ties to “countries that don’t like us very much”.

If we dump all of the big oil subsidies into solar energy, wind farms, and 100+ MPG cars, we become the major renewable power player for the 21st century, which many economists predict will overtake the automobile industry as the backbone of the next hundred years and put us squarely in the lead again globally.

Plus, if we put the money into these fields, we can get past the Prius and on to something more like that Tesla sports car. I’d like to be fuel efficient, but until they make something with the same kind of torque as my 12 MPG pickup, I’m sticking with dirty.

By: someguy

someguy — Fri, 07 Nov 2008 17:46:23 +0000

Isn’t it funny though? We picked the guy who will have the government doing all our spending to help us, yet this government has put us, what 10 tril. in the hole? And how come gas prices were fine during this war until 06? Was it due to Pelosi or the majority becoming demoratic? I’m just wondering why it seemed like the gas prices suddenly started going wherever they wanted. Little strange.

Actually, after asking I did a search and found this. I guess I know why now.
http://article.nationalreview.com/?q=N2M4NzNkMDQ4YjZjZjFkZWE4YWJjODUzMDZiYTcyOWM=

By: Craig

Craig — Wed, 05 Nov 2008 18:24:48 +0000

This was very informative, thanks to all who contributed.

By: Jacob Morgan

Jacob Morgan — Tue, 04 Nov 2008 17:10:10 +0000

He plans to pay for it with savings from ending the Iraq war, ending subsidies to oil and gas, and other tweaks to the federal budget. However, it will still not balance out even after these anticipated savings and cuts are made. Keep in mind that the congressional budget office ran these plans through their models and found that McCain’s plan would end up with a higher additional budget shortfall in the neighborhood of several hundred billion dollars over what Obama’s would. That is because he plans to keep the war going indefinitely, keep the Bush tax cuts fully in place, and proposes more tax cuts that are effectively un-funded by any specified cuts or revenue increases.

By: someguy

someguy — Tue, 04 Nov 2008 12:49:24 +0000

Are we also taking into account how we’ll be paying more taxes to help people get that free healthcare he wants? Just wondering. Or the extra cost we’ll have to pay for the education plan he’s proposing? Do we know how much that will tax on to what we’ll be paying in? Still, just curious.

By: Jacob Morgan

Jacob Morgan — Thu, 30 Oct 2008 15:56:38 +0000

Hey guys, keep this detail in mind when running your numbers: the SSI tax increase isn’t planned to take effect until 2018! That means, effectively, NEVER!

And of course, who knows what tax plan will actually come out of Congress in the end.

By: Scott

Scott — Thu, 30 Oct 2008 03:55:56 +0000

I am a small business owner and have had my accountants run our last years numbers through obamas proposed tax plan and what I am being told is that I can expect a 12.57% increase in my federal tax under obamas plan compared to the current tax plan. That is figured using all aspects of the obama plan not just the 4.6% increase on the top scale. If you are a small business owner who has total taxable income of over 250k I highly suggest that you have a good account run your numbers so you can see for yourself how Obamas plan will effect you.

By: Marlen

Marlen — Wed, 29 Oct 2008 02:36:25 +0000

To Mark. If you are an S Corp there are no partners – there are shareholders. If you (the partners, er, shareholders) actually work for the S Corp, you should be receiving salaries for your work, thus reducing net profit. Still each of you will pay taxes on your payroll plus your share of profits. You say you have 30 employees (including you?) and that you are “investing in staff ahead of demand” – does that mean you haven’t earned the income to pay the staff? Is the money you have in the bank from earned income or capital investment? If from investment, it seems you would have a loss, not a gain – no profit to tax. And if it comes to a $200K profit, it is shared pro-rata by the shareholders according to the operating agreements. so if there are 4 of you with equal ownership, the profit is $50K thus no additional taxes under Mr. Obama’s plan. He is the way to go.

By: Marlen

Marlen — Wed, 29 Oct 2008 02:24:03 +0000

Hi Andy. There is nothing strange or hard to understand about a balance sheet. You do not pay taxes on the balance sheet – you pay taxes on your net profit. A competent accountant, with an eye toward the future – future trends in the business, future potential profits, or future potential slowdowns in your field, will make smart choices on expensing or depreciating equipment purchases – this affects both net profit and balance sheet. A balance sheet is just a snapshot of what you have versus what you owe at the present, if time were to stand still. Assets = liabilities plus equity.

By: Andy

Andy — Wed, 29 Oct 2008 01:36:44 +0000

Somebody smart give us a sample balance sheet of a typical small business owner. Spell it out real clear with easy to understand math. Throw in any outstanding loans the company might have and explain what they should do if they end up with a net profit of over $250k. If I’m right about what I’m understanding, then it would end 80% of the arguments being made against it. The personal income tax example isn’t really in question. Everyone pretty much understands that part. It’s the small business balance sheet thats at issue both here and on the campaign trail.

By: Mark O

Mark O — Wed, 29 Oct 2008 01:01:44 +0000

Here’s a perspective from an actual business owner. I am a partner in a marketing communications firm. We are a Sub-S Corporation, and have 30 employees. We are a member of the Inc. 5000 (fastest growing privately held companies). One of the reasons is we have invested in staff ahead of demand – giving us resources to generate new business and have the resources to except new clients, even on tight deadlines. We can afford this because we keep money in the bank every year (instead of paying out all profits to the partners). These profits – whether distributed or not – are taxed to the partners at our individual tax rates. When the combination of income distributed plus income retained is more than $200,000 the income tax rate will go up. This will cut into liquidity – and therefore provide less funding for future job creation. It’s as simple as that. Or we can complicate things and take on lots of debt. Heck maybe the government will make the payments on it! Contrary to popular belief, business owners are not all greedy. Let us keep more of what our companies earn and we’ll do the right thing with it.

By: Brian Angliss

Brian Angliss — Tue, 28 Oct 2008 19:34:47 +0000

Fair AGI criticism. My error.

That doesn’t actually change my point, however, since a trucker’s household with adjusted gross income of $150k, and itemized deductions in of 50% of his income, would a) receive a $3924 tax cut (married filing jointly/1 earner/2 dependents) or $4427 tax cut (married filing jointly/2 earner/2 dependents), would b) have taxable income of only $61,400 (derivation: 50% of $150,000 is $75,000, minus four exemptions each worth $3400, or $13,600), and c) would receive back a tax refund of about $24,000 (after the tax cut was applied to the initial taxes – in 2007 it would have been $27680)

Furthermore, the trucker in this hypothetical would have paid in $36,112 over the course of the year (without Obama’s tax cut, according to the IRS Rate tables for 2007). That’s about $3,010 per month. Obama’s tax cut would reduce that by about $327 per month, improving the trucker’s monthly cash flow significantly.

By: Skyler

Skyler — Tue, 28 Oct 2008 19:07:58 +0000

http://en.wikipedia.org/wiki/Adjusted_Gross_Income … Use your “Obama Tax Cut” Calculator correctly.

By: Skyler

Skyler — Tue, 28 Oct 2008 19:05:21 +0000

Brian, what part of Adjusted Gross Income is so hard that you misinterpret it as “net income”?

By: Brian Angliss

Brian Angliss — Tue, 28 Oct 2008 18:05:27 +0000

Skyler, what part of "you get taxed on net income, not gross income" is so confusing? Operating costs are deductible expenses. Insurance is deductible in this case. So is vehicle maintenance. So if their take home (net) pay is $25,000 or so, they'll get a tax cut, not a tax increase. In fact, a married filing jointly, 1-earner, 2 dependent household would get a cut of $915. A married filing jointly, 2-earner, 2 dependent household would get back $1266. (source: Obama Tax Cut)

By: Skyler

Skyler — Tue, 28 Oct 2008 17:55:09 +0000

hmm…. 99.999% of the things you own got to you by truck, meaning a truck driver drove it. Over two thirds of trucks are independently owned, 2/3rds of them are sole proprietorships, which have to pay nearly half of their budget to daily operating costs (diesel), most of the rest goes to state road taxes, Insurance, vehicle maintenance, and other daily expenditures (food, etc). Most independent truckers make over $150k a year, some MUCH more, yet only take home $25k.
Let’s say we don’t care about the truck driver in this case. With Obama’s tax “cut” we’re looking at losing roughly half of the trucking industry, which means taking those oranges from Florida to Idaho will take 60 days. I wonder what kind of supply/demand issues will crop up in the mean time, especially considering the body’s reliance on vitamin C.

By: Marlen

Marlen — Tue, 28 Oct 2008 12:57:19 +0000

To Joseph. You didn’t say what form the business is – a C Corp, S Corp, LLC Single Member, LLC Partnership? The answers will be different. Also, if your son “works with you”, is he on payroll? As a corporation, the owners, if they work for the corporation (both C and S) should be on payroll also, thus reducing net profit. For all, though, taxes are based on profits not gross earnings. So…the gross earnings are not taxable, the 80K is. Obama does you good. McCain will cost your employees (and you on the FICA and Medicare burden) taxes on your health insurance! Obama will give your small business a tax credit for providing health insurance.