How much would Joe the Plumber's Taxes Change?

[DavidJames]

Did nobody read the CNNMoney article which described how few would actually be affected.

Socialism? - ********
Ignorance? - Plentiful

 

[Magyar]

I don't see what having a plumbling license has to do with owning a plumbing business. I'd imagine he'd probably, you know, hire licensed plumbers to do the work while he ran the business. My uncle ran a shipping business for a while, didn't have a CDL. I don't even think he owned a truck.

Well, I don't know about the plumbing business or the trucking business. And while what you say is possible, it is highly unlikely for many reasons but here are 2.

You need huge liability insurance to run anything in these kinds of trades.
It will be almost impossible for you to get liability insurance as a business owner without holding a license - from the insurance point of view - how can you manage monitor and control your business if you do not know the rules etc. And this is different from your trucking thing because as the owner you may not know how to drive a truck but the police can enforce the rules of the road.

Secondly - again we go back to pulling a license. It is the business owner that pulls the license.

For example, I have a T2 license in CT to do low voltage permits. This license is only obtainable in CT IF you have a business license and is required to pull permits.
If you do not own a business you have T1 licence which permits you to do the work but you can not pull permits. Now all of this does vary state by state and I don't know the exacts for OH, so YMMV.

 

[joobz]

The part I don't get is that the Business profits aren't "His" income.

He would be an employee of his own company and would pay himself whatever he wanted. If his plan was to take full profits for himself, then he's a dumb business man.
The smart person would pay himself with the profits and use the remainder to invest back into the company. The would make his business profits low and save money, and would keep him well paid and below the tax issue.


Really, I have no clue what the heck Joe's complaint is.

 

[pgwenthold]

The part I don't get is that the Business profits aren't "His" income.

He would be an employee of his own company and would pay himself whatever he wanted. If his plan was to take full profits for himself, then he's a dumb business man.
The smart person would pay himself with the profits and use the remainder to invest back into the company. The would make his business profits low and save money, and would keep him well paid and below the tax issue.

Moreover, it would mean he is investing back into his business. Isn't that a GOOD thing?

IOW, Obama's approach is an incentive for successful business owners to invest in their business instead of taking the cash for their personal use. Seems to me like a good idea.

 

[shuize]

Of course, what isn't so easy to understand is that most of those 10 or 20 people work for a company that falls under the “Joe the Plumber” tax bracket. As their employers' tax burdens increase, there's less money to pay their wages, so they will be making less, and have a higher risk of winding up unemployed.

Further, most of the goods and services that we buy come from companies that would fall in this higher tax bracket as well, so these companies need to charge higher prices for their goods and services to make up the loss.

Many people will be glad to see “The Rich” being hit with heavier taxes, to support all sorts of handouts for the lower classes, but those in the lower classes will be puzzled that in spite of the benefits they think they are getting, that they have a harder time making enough money to meet their own needs.

Socialism is one of the most insidious scams that mankind has ever devised. Those who are most victimized by it are the ones who think they are the beneficiaries, and as they find themselves being dragged down further and further, they just demand more of the same.

I agree.

When I was growing up my family ran a business not unlike Joe the Plumber's and employed as many as five and as few as one outside worker, some skilled some not. As a result, I received an early lesson in micro economics:

Government raises minimum wage? One less day laborer.

Government raises taxes? One less skilled employee.

As a family member, I always had a part-time job. Of course, that also meant I had to pick up the slack (with no increase in pay) whenever they had to let one of their workers go.

 

[HarryKeogh]

So Joe the plumber doesn't have a license, earns about 40K a year, only discussed buying his boss' business a couple of times and the business' entire revenue is only about 100k a year. Joe the plumber is Joe the Liar, Liar Pants on Fire.

http://www.msnbc.msn.com/id/27221645/

 

[Whiplash]

Well I must say I'm shocked. Ok not really. But of course, it is rather telling that the next day of the debate there is an ongoing effort to destroy Joe and his credibility. How insanely typical. And (from people and) on a forum where one of the key rules of debate is to attack the message, and not the messanger. But whenever anyone pops up that could even remotely be seen as a plus to McCain or Republicans, the smear machine goes right into high gear before any facts are even really known about the person. Palin, now Joe the Plumber. Very sad people.

I think you are just upset because Obama inadvertantly betrayed that the core belief of most Democrats is a socialistic world view. Someone in one of these threads said it wasn't the smartest thing that Obama ever said. I wonder, is that because it betrays the real underlying beliefs? Or because you disagree with the mentality of "spreading the wealth"? If the former, then you are admitting you wish he hadn't admitted something that shows your true colors, and that you wish to hide from them. If the latter, then why do you support Democrats when they are clearly driven by socialistic ideals?

One of the most telling points of the debate was when Obama started talking about how his friend Warren Buffet can afford to pay more taxes, and McCain rightly interjected "we are talking about Joe the Plumber". The Democrats want desperately to paint the people who are to be taxed as being outrageously rich like Buffet. Joe is a great example for people to see how it's not really about taxing the super rich. How it will hurt people in middle America. People who want to start or buy a business, etc. How quickly Obama wanted to turn it right back to some uber-rich person like Buffet. The intellectual dishonesty is continuously outrageous.

 

[WildCat]

I am looking at a doc for a local city RFQ which lists all the prevailing wage requirements for all trades. Plumbers and pipe fitters are scaled at $56-$58 per hour.

Prevailing wage is not the same as the rate a plumbing company will charge. That would probably be anywhere from $85 - $125/hr per man, since they have to pay their workers and their benefits as well as the vehicle expenses, tools, office expenses, insurance, licensing, etc etc.

 

[godofpie]

So Joe the plumber doesn't have a license, earns about 40K a year, only discussed buying his boss' business a couple of times and the business' entire revenue is only about 100k a year. Joe the plumber is Joe the Liar, Liar Pants on Fire.

http://www.msnbc.msn.com/id/27221645/

Everyone equated "makes $250,000 a year" with "profits $250,000 a year". The problem was that neither of the candidates had any idea what the average Joe earns. If they did they would have called shenanigans on the spot. It is a little sad that both the candidates are so far removed from everyday life that $250k a year profit sounded reasonable for a 2 man operation. A plumber that makes $250k a year?!?! Yea, right. My restaurant grosses $600,000 and I don't even have 10% left over when everything is said and done.
BTW Joe owes back taxes-
http://www.bloomberg.com/apps/news?pid=20601087&sid=aC4j3T5.s_eQ&refer=home

 

[SnuggleSmacks]

Whiplash, for once I actually agree with you on something. We should not be attacking Joe the Plumber...even though he exagerated the details of his situation for effect. It was not his fault that McCain chose to use him shamelessly, without his permission, as an emblem for the 5% or so of small businesses who might actually have to pay a little more in taxes.

So, let's debate instead the content of what was said.

The link which HarryKeogh gives, above, states:

In any event, Obama’s tax plan specifies that the higher rate would apply only to income above the $250,000 threshold. Assuming Wurzelbacher’s income as owner somehow hit $280,000 — the top end of his supposition of the company’s revenue — only the extra $30,000 would be taxed at a higher rate.
Analysts calculated that the extra tax would amount to $900, which would likely be more than offset by separate provisions of Obama’s plan: a 50 percent tax credit for health care and elimination of the capital gains tax for small businesses.

So...do you truly believe that $900 in extra taxes would cause a small business which makes $280k to close, inhibit them from hiring, or deter Joe from buying the business?

Really?

 

[geni]

Well I must say I'm shocked. Ok not really. But of course, it is rather telling that the next day of the debate there is an ongoing effort to destroy Joe and his credibility. How insanely typical. And (from people and) on a forum where one of the key rules of debate is to attack the message, and not the messanger.....

and McCain rightly interjected "we are talking about Joe the Plumber".

Your post appears to contain an internal contradiction.

 

[DavidJames]

So...do you truly believe that $900 in extra taxes would cause a small business which makes $280k to close, inhibit them from hiring, or deter Joe from buying the business?

Really?

I don't. Joe is a registered Republican and I doubt he ever had any intention of voting for Obama. Joe, you there? you can correct me if I'm wrong

Anyone know why Joe went to talk to Obama or how McCain found out about him?

 

[Magyar]

Prevailing wage is not the same as the rate a plumbing company will charge. That would probably be anywhere from $85 - $125/hr per man, since they have to pay their workers and their benefits as well as the vehicle expenses, tools, office expenses, insurance, licensing, etc etc.

I KNOW THAT - Please read my post again. I used the prevailing wage ONLY as an example of how much work you would actually have to do to earn that much money. And In a prevailing wage the employer has to pay that scale - though they may pay the employee less under normal circumstances.

When the company bills out at your $85-125 per hour to the end user it does not mean that they are making that much. they have to pay the employees salary and all the other expenses.

That's why what McCain/Joe claimed was laughable.

Whiplash - no one is smearing any one. Those of us who actually OWN business are just calling McCain/Joe's BS out.

There are 2 options here, either;

1) Joes Business grossed $250K in which case he is nowhere near being affected by any tax rais that Obama would create, because out of that $250K would come all the expenses, deductions etc and then the company would pay him his salary.

Any realistic way you cut it, if his business - even if it was a sole proprietor would not be ANYWHERE near the higher tax bracket. I wager to say that Even if he grossed $500,000
and was stupid enough to operate under a Sole proprietorship he would STILL not come close.


2) IF his business did ACTALLY show a PROFIT of $250,000 the odds are that his business would have to have grossed between $1 Million and $1.5 Million.

In which case he is WAY PAST anything middle class and McCAin IS right Joe IS RICH!

The end result is that this whole Joe the plumber is an "average guy" who will have to pay more taxes under Obama is just BULL.

 

[eeyore1954]

The part I don't get is that the Business profits aren't "His" income.

He would be an employee of his own company and would pay himself whatever he wanted. If his plan was to take full profits for himself, then he's a dumb business man.

The smart person would pay himself with the profits and use the remainder to invest back into the company. The would make his business profits low and save money, and would keep him well paid and below the tax issue.

it is not as simple as that. What if he invests a lot of his money back into the company instead of taking it as a salary and business is slow (very possible now) for the next few years and he is forced to liquidate whatever he bought at firesale prices. Plus a good portion of what he reinvests into the company he will have to depreciate over its useful life. Although at the present time there are very good section 179 deductions and additional bonus first year depreciation.
Also if he is audited the IRS would make him claim a reasonable? salary not just whatever number will give him the best results.
My whole point is it isn't a cut and dried as the smart person would do this or the dumb person would do that.
The smartest thing Joe the plumber could do is make sure he has good accountant who will make him aware of his different choices and the pros and cons of them. He might even be able to barter for his fee. Although that would supposedly be taxable also.

But if Joe is anything like the typical American small business owner he will have a lot of unreported cash income also.

 

[Kopji]

Someone in one of these threads said it wasn't the smartest thing that Obama ever said... -Whiplash

Oooo, hey I said that. I suppose I should respond. (all quotes Whiplash)

Well I must say I'm shocked. Ok not really. But of course, it is rather telling that the next day of the debate there is an ongoing effort to destroy Joe and his credibility. How insanely typical. And (from people and) on a forum where one of the key rules of debate is to attack the message, and not the messanger. But whenever anyone pops up that could even remotely be seen as a plus to McCain or Republicans, the smear machine goes right into high gear before any facts are even really known about the person. Palin, now Joe the Plumber. Very sad people.

Do you get out much? I watched the debate on CNN last night which is affectionately known as Commie News Network around here. Obama clearly mopped the floor with the guy yet they were slavering about how great McCain was. McCain did not even get poor Joe's name right.

I think you are just upset because Obama inadvertently betrayed that the core belief of most Democrats is a socialistic world view. Someone in one of these threads said it wasn't the smartest thing that Obama ever said. I wonder, is that because it betrays the real underlying beliefs? Or because you disagree with the mentality of "spreading the wealth"? If the former, then you are admitting you wish he hadn't admitted something that shows your true colors, and that you wish to hide from them. If the latter, then why do you support Democrats when they are clearly driven by socialistic ideals?

I am not upset. (I do admit it annoys me when posters ascribe various emotions to me.) If I'm guilty of a 'forum emotion' it is usually a sense of bemusement and humor at the way the world is. I am not driven by ideas but am instead more or less oriented by them. So now you know.

I think what Obama said has about the same truth value as saying that Republicans benefit the oil companies and start wars. McCain would not say that no matter how much it might reflect the truth. I'm ok with a more nuanced expression of truth.

I am actually at a bit of a loss what to think this month. I woke up one morning and am part owner of banks, insurance companies, and tons of bad mortgages. I pay my few debts on time and balance my budget. My life is very ungovernmental, socialist or not.

I've been spending time doing some study and reevaluating political ideas I've often assumed as being wrong. Republicans have shown me that when their ideology crashes around them they quickly resort to socialism to mitigate the carnage. But not of a deliberative thinking strategy kind like hated Democrats - Republicans have become a superior sort of a OhMyGawd! reactionary kind of socialist.

One of the most telling points of the debate was when Obama started talking about how his friend Warren Buffet can afford to pay more taxes, and McCain rightly interjected "we are talking about Joe the Plumber". The Democrats want desperately to paint the people who are to be taxed as being outrageously rich like Buffet. Joe is a great example for people to see how it's not really about taxing the super rich. How it will hurt people in middle America. People who want to start or buy a business, etc. How quickly Obama wanted to turn it right back to some uber-rich person like Buffet. The intellectual dishonesty is continuously outrageous.

And hence this thread. McCain wanted us to all focus on Joe the not-so-much-a-plumber, and here we are doing it to the sound of some complaining that it does not make McCain look very good.

I seem to get misunderstood sometimes. Maybe it is because I like to toss both sides of a topic around to see how it looks from various sides. Maybe I'm just not a very clear communicator. I think I've been pretty fair to McCain considering that I don't like him very much. I suspect he would make a good president even though I don't plan on voting for him. (If I only voted for people I liked I'd have to stay home on election day).

 

[Meadmaker]

Things I would like to see: (I won't see them, but I would like to.)

I would like to see the Obama camp do about a 20 minute commercial on Joe the Plumber. It starts with Joe the Plumber as he is today, and talks about his taxes, and how he gets a tax cut from Obama. It assumes that in the future, Joe has a great career. It starts by a promotion to supervisor or something, and under Obama's plan, he gets a tax cut. Eventually, he saves up money and starts a plumbing shop of his own. The first few years, it's tough. He's got to pay employees, and he doesn't even make as much as they do, after expenses, but since he isn't making much, he gets a tax cut. Then, his business grows. He adds a few vans, and hires more people, and pays himself a little bit bigger salary, and gets a tax cut. Then, his business really grows. He takes out a quarter page yellow pages ad, and raises his own salary. He's making so much that he doesn't get a tax cut under Obama's plan. Finally, he takes out a full page ad, hires even more people, buys a Cadillac (Joe the Plumber only buys American cars), and invests some money in the stock market where he makes good investments and rakes in the cash. He makes almost $300,000 in one year, and his taxes go up.

 

[ParanoidAndroid]

Well I must say I'm shocked. Ok not really. But of course, it is rather telling that the next day of the debate there is an ongoing effort to destroy Joe and his credibility. How insanely typical. And (from people and) on a forum where one of the key rules of debate is to attack the message, and not the messanger. But whenever anyone pops up that could even remotely be seen as a plus to McCain or Republicans, the smear machine goes right into high gear before any facts are even really known about the person. Palin, now Joe the Plumber. Very sad people.

Here's the problem with your point: "Joe the plumber" is an intellectually dishonest devise employed by John McCain in a debate about taxation. So when right-minded skeptics attack the credibility of the devise, "Joe the plumber", they are in fact attacking the argument put forth by Senator McCain.

Let's try a different example. If one were to try to demonstrate the validity of Christianity by virtue of the annual gifting habits of, say, Santa Clause, would you accuse critics of that attempt for demonstrating that Santa Clause is a mythical figure about whom the "facts" are inconsistent--including the the criteria for, delivery method of, and placement of his gifts--of attacking the messenger?

Think about it; and again (I know it's hard...I understand) watch the confirmation bias...

 

[joobz]

it is not as simple as that.

Certainly. But it's also not as simple as Obama will hurt small business either. What you just decrided is exactly why the "joe the plumber" story is nonsense.

 

[Puppycow]

Of course, what isn't so easy to understand is that most of those 10 or 20 people work for a company that falls under the “Joe the Plumber” tax bracket. As their employers' tax burdens increase, there's less money to pay their wages, so they will be making less, and have a higher risk of winding up unemployed.

Further, most of the goods and services that we buy come from companies that would fall in this higher tax bracket as well, so these companies need to charge higher prices for their goods and services to make up the loss.

Many people will be glad to see “The Rich” being hit with heavier taxes, to support all sorts of handouts for the lower classes, but those in the lower classes will be puzzled that in spite of the benefits they think they are getting, that they have a harder time making enough money to meet their own needs.

Socialism is one of the most insidious scams that mankind has ever devised. Those who are most victimized by it are the ones who think they are the beneficiaries, and as they find themselves being dragged down further and further, they just demand more of the same.

I'm no expert on tax policy, but it seems to me that income taxes would not have much effect on employment. Corporate taxes and payroll taxes would have a big affect, but not income taxes.

If this is true, I would favor reducing corporate taxes and payroll taxes while raising the marginal tax rate on high income earners to compensate. I don't believe this is socialism, BTW. The main problem with socialism is central-planning. A progressive tax system does not distort the market like central planning does. I actually believe that in the long run, everyone would benefit including the rich because it would be good for the economy and economic growth. Everything is not a zero-sum thing. People will spend more money if they have more money, which creates economic activity.

 

[eeyore1954]

Certainly. But it's also not as simple as Obama will hurt small business either. What you just decrided is exactly why the "joe the plumber" story is nonsense.

Of course for McCain to claim that 250,000 is what most small businesses earn is ridiculous. I say that and I am leaning toward voting for him. ALthough since I live in NY a McCain vote won't really count . Palins husbands schedule C's are closer to the typical than a plumbing business earning 250,000 profit.