So this guy I'm talking to is flapping his jaw about "small businesses

[Ninga]

making over $250,000" exempt from the latest tax cut proposal are being targeted by Obama unfairly and yadda yadda yadda....job creators yadda yadda.

So I say, "hey it's a great deal for ALL small businesses making $250,000 and over"

So I wait for him to finish calling me every name in the book.

"are you finished"? I say. I finally get to speak my mind.

"Under Obama's tax plan cut EVERYONE gets a tax cut...Mr Business man who mAkes for example, $300,000, gets a tax cut on his first $250,000 and is taxed only on the difference".

What came out of his mouth next sounded like gurgling combined with choking.

The end.

[corkhead]

1. Some people are so blinded by their unjustified hatred, they are stuck on stupid.

[meaculpa2011]

2. How much is the...

tax cut on the first $250,000?

[LiberalFighter]

12. In this instance it is better if you do research to help understand this.

Most people don't understand it even if they do their own tax returns. The IRS makes it easy for everyone to determine the taxes they owe with the simple tables if anyone does it manually.

But the simple explanation is:
unless someone has taxable income that does not exceed the first tax bracket their taxable income is taxed by at least 2 different rates. Which means currently someone with taxable income over $388,350 has income that falls within 6 different tax rates and each portion of income is taxed at the appropriate rate. Their income is not taxed all at the same rate.

Don't feel sorry for them. If their taxable income is $200,000 or more their average itemized deductions are $64,000. That is income that is exempt from taxes.

[ieoeja]

23. $6249 Married Filing Jointly ... $6935 Single

Above numbers are using today's brackets which increase every year. So the Obama tax cut for people with over $250,000 net income (e.g. after all deductions) will be slightly higher than this, but not by much.


Earnings in the 10% bracket get pushed up into the 15% bracket.

15% bracket remains unchanged.

All middle income brackets increase 3 points. The top bracket (>$388,350) increases 4.6 points.

In other words, the absolute poorest (<$17,400 or $8,700) got the largest percentage tax holiday (good for them). The wealthiest got almost as big a percentage holiday. While the middle class got just enough to overlook the fact that the wealthy got a larger holiday by percentage not just by absolute value.

[denverbill]

3. That's something Obama needs to hammer. EVERYONE gets a cut. The rich don't get a special cut.

Everyone gets the tax cut on their first $250000 in income. There is just no extra tax cut specifically targetting the extremely wealthy.

[zeemike]

4. And what they never say is that tax is on AGI

That is Adjusted Gross Income

And that the small business deducts all kinds of expenses like labor and materials office expenses taxes and just about everything a business has in expenses....so you could have millions in income but pay tax on 250K...you could even buy a Humvee to drive around and deduct it from your taxes....and that is why you see so many of them around.

[PatSeg]

29. Exactly

I wish they would explain this more clearly.

[jberryhill]

32. The easiest tax cut - hire an employee

[zeemike]

34. That is right because every penny it costs you is deductible.

But they want to pretend it is not and that taxes are killing jobs.

[BSUbluNorange]

5. Also only 3% of "small business" owners make over $250,000

[GreenPartyVoter]

6. Seriously! I wish we made anything like $250K.

[Ikonoklast]

9. Not 'make', 'keep'.

Plenty earn that much in gross revenue, but only a very few keep 250K after expenses.

The company I own earns a low six-figure gross income every year, but what I get to keep out of that is a small fraction of the gross.

[savalez]

20. Here's a good article supporting that:

The GOP’s central argument against President Obama’s renewed push to let taxes rise on incomes over $250,000 is that it’ll target small businesses. The party’s rhetoric obscures the fact that the plan will hike taxes on just a minor fraction small business filers.

http://tpmdc.talkingpointsmemo.com/2012/07/obama-tax-plan-small-business.php?ref=fpblg

[renate]

24. that's a very important point that the campaign and administration, inexplicably, aren't making

And welcome to DU!

[BSUbluNorange]

39. Thanks for the welcome!

I've lurked for about a year, I don't know how I could have stayed on the offensive as a Mormon living here in Idaho without DU and DKos! Haha

[SHRED]

7. you can also point out

Over 250k after deductions means a small business is doing very well. And obtw...the definitions of small business conjures up something different for everyone and the RW preys on this.

[Ninga]

14. I will add this point to my hand written 3x5 card.....

[lpbk2713]

8. No fair.

No fair contradicting Faux and the other RW Media Hatemongers' propaganda with the truth.


You burst his little balloon and threw a bucket of water on his security blanket.



      [big] "WAAAH!! No fair!!" [/big]

[FSogol]

10. I have that same exact converstion all the time.

It is amazing how many times I have to explain it.

[ewagner]

11. ...about that small business...

Most small businesses I know of (some law firms included) do a LOT more than $250K per year...

BUT

It's not all profit and not all taxable...

If the owners (Partners, "S"Corps, etc) take out more than $250K per year then that is subject to the new tax rate (3% or so????) I also know that because of the structure of the tax laws...the owners can claim lots of items that benefit them or their families as legitimate business expenses and exempt them from taxes.

Is this a correct understanding of the situation?

[Ninga]

13. Great points being made here. Keep hammering away!

[leftylauren]

15. To piggyback off of what other have said on this thread

It goes back to democratic party's messaging problem.
It truly amazes me how many people are self proclaimed experts on taxes but have no understanding of progressive taxes or even know what AGI is.

They need to saying the tax cuts will be extended for everyone on their first $250K (even the very very wealthy get this tax extension) and instead of just saying AGI they need to be explaining it's the money that is still leftover after all taxable deductions have already been taken after payroll, after all the bills have been paid, after capital improvements, etc.

The misinformation everyone hears is that the tax is going to cripple small businesses without ever understanding how the tax actually is applied.

[leftylauren]

17. Example I like to give is

if someone makes an AGI of $250,001.00 how much will their taxes increase? Everyone always assumes that the 3% increase would be $7,500 but in reality their tax increase would be a whopping .03 thats 3 whole pennies.

[LiberalFighter]

16. Maybe this needs to be thrown in the mix.

Is that $250k gross or net revenue?

[jeff47]

18. Neither. It's AGI.

Which is less than net revenue.

[LiberalFighter]

22. Good to clear that up.

The concept can be complicated to figure out unless one is trained or regularly performs the necessary steps each year.

[leftylauren]

21. and if its like a lot of the business owners I know the AGI is after

the car payment and fuel is taken as a business deduction
after a portion of the home mortgage and utilities are deducted because of the home office
all home computers written off
travel expenses
business lunches
and the list goes on


all legitimate business expenses but expenses that no Walmart employee can deduct to reduce their taxable income.

[Ninga]

25. Which goes to the point that "small businesses are beautiful things".

[N_E_1 for Tennis]

26. Little bet, but probably a sure one ...

is "this guy' can't conceive $250,000.
Mismatched loyalties. What a maroon!

I had a small, small biz, before heart attacks and strokes led me to retire.
60 to 70 grand a year was awesome. Supported me and 1 other.

Believe me, we both wanted to pay our fair share in taxes.

Small minds, small people.

[TBMASE]

27. is it still a tax cut to keep the same rates they already have?

or will rates be lowered further?

[longship]

28. Damn! This in an important thread!

Very informative. I guess I knew about this, having done my own taxes for years. But you forget these things when they are discussed as policy. Somehow, the context makes a difference that isn't really there.

Thank you to Ninga and all who responded!

[Ninga]

35. Thanks. It was a palm slap to my forehead moment. I am guilty of making arguments too

complicated and need to continue to find simpler more straightforward facts like this one.

We all need easier to spread talking points.

[patrice]

30. K&R for tactics.

[Festivito]

31. IIRC, it's $70 for the next $100,000. SEVENTY-BUCKS!

And, that's Adjusted Gross Income at $350,000. For that he'd have to be pulling in 400-500 thou before deductions.

Gee, if I had a half-million a year, I'd be able to afford $70.

And, whoever couldn't would be an overpaid idiot.

[Ninga]

36. Thanks for doing the math!

[LondonReign2]

38. You math is incorrect I think

If we presume the incremental tax increase is 3%, the additional taxes owed on AGI from $250,001 - $350,000 is $3,000. Your point is certainly correct, the calculation just isn't right.

But the canard that small business aren't hiring because, or more ridiculous yet they will go bankrupt, because their after-tax take home pay on the incremental $100K in profit is only $65,000 rather than $69,000....well, they know they are lying.

[Festivito]

40. That is an "If I Recall Correctly" just the same, let's look.

1. I think the increases are progressive, so that would not be 3% across the board. It would be lower for that first 100,000.

2. The first 250,000 would be a lower initial tax starting point than in the Republican plan resulting in the Democratic plan only being $70 higher for that additional 100,000.

[B Calm]

33. The small business owner I work for

has 46 factories and is operating world wide. Yet he is classified as a small business owner. .

[Tsiyu]

37. When we had a Fairness Doctrine

the media was forced to air the truth every now and again.

Now, thanks to unregulated media, every partisan lie gains the veneer of truth by repetition.

And people are dumber than if they had no media at all.

(FU)X keeps its fans amped up on dramatic prevarication; they can barely calm down to hear reality.

That guy's lucky you are a patient person. He's less of an idiot for your efforts.

[Ninga]

41. Steve Rattner and former Judge Catherine Crier both today managed to talk about how EVERYBODY

would benefit from the tax cut! Hope the media keeps this point kicked.