The Observation Deck

I am Joe the plumber

I want to be Joe the Plumber. I think that Joe the Plumber will be the most popular Halloween costume this year.

Mark

If you REALLY are Joe the plumber, then I think you should go see an attorney and a CPA, because your concerns about growing your business in the face of a "tax increase" are pretty much unfounded.

Most small businesses (those NETTING 250K per year) are subchapter S corps., or LLC's. Those are pass through entities whose NET profits are reported by the owners directly on their 1040.

Which means, in essence, that you could gross a billion dollars at Joe's plumbing, LLC, and as long as you had deductible expenses for salaries, benefits, new trucks, etc. of 99,750,000. Since only 250K would flow through to your personal return, there would be no additional tax.

So Joe's concern isn't his ability to grow his business, it his ability to profit more from it, without an additional tax bite.

Jeff

Do you guys think that McCain is trying to talk to people who don't understand the tax code? It seems like he is trying to scare the uneducated.

An update on Joe the Plumber.

http://www.politico.com/blogs/bensmith/ ... ation.html

Danielle

The tax code, together with the regs., is many time incomprehensible.

But, taxable NET profits are pretty easy to differentiate from GROSS income....All this "concern" about not being able to grow a business, create jobs, etc., is a bunch of crap. If your LLC is netting 400K, then instead of paying an increas in tax on anything over 250K, simply plow it back into the business....hire someone, whatever. For eventual sale, your business is more valuable. Seems like it would stimulate investment into a business.....as opposed to just milking it until the teets are sore.

Now, if you want to POCKET half a mill from your plumbing business, yeah, you'll get taxed....but if that's your intent, then growing the business wasn't your real concern.....

Jeff

Thanks Jeff. I will admit that my husband, who incidentally is a small business owner, knows more about this than I do and was floored last night about how little knowledge Joe seemed to have. I would recommend that people who own a small business hire a good accountant or tax attorney as we have done.

Will the real Joe the Plumber stand up?

The problem is that Joe buys his materials from businesses who make more than 250k/year. Those businesses buy their materials from other business making over 250k/year. The whole supply chain just can’t simply pay the additional tax because they ‘can afford it’ as Obama claims. Those businesses will pass on the additional tax as increases in the price of Joe’s materials. Joe then passes the additional cost down to the 95% of Americans who haven’t had their taxes raised. I guess the answer is to keep a few extra buckets in the house for leaky plumbing.

Charlie did you read Jeff's post?

It looks like you didn't.

Thanks Jeff. I truly didn't know that. Seeing as individuals get taxed on their gross income so should businesses. But they have cost of doing business deductions. Indivdauls don't i.e. housing, food, utilities.

http://www.dailykos.com/story/2008/10/16/02217/845

The Daily Kos wonders if Joe is related to Charles Keating...

Joe The Pllumber is gonna have a very miserable life for the next 3 weeks.

From what I gather of the exchange between Obama and Joe is that Joe is thinking of buying this business which would put his taxable income in excess of $250k so it most likely is an S-Corp or LLC and flowing thru to his personal return. This taxable income is after deductions for supplies, labor, etc and also after his itemized deductions for mortgage int, real est tax, charity and after the personal exemptions (there are phase-outs of itemized deductions and personal exemptions at this income level which complicates things so i will ignore for the following example)

Taxes should be kept in perspective since we have a graduated tax rate schedule, but using marginal taxes - the tax paid on the next dollar of income earned - under the McCain plan Joe would pay 36% fed tax, 6.55% Ohio and 2.25% Toledo for a total marginal rate of 44.8%. The Obama plan increases the Federal marginal rate to 39%, so the total marginal rate is 47.8%. So on every dollar earned under the Obamba plan Joe will pay an additional 3 cents in taxes and pocket 97 cents

Being that Joe isn't even legally a plumber I don't think he has anything to worry about. I just have to wonder why he considered this line of questioning when it appears that he has only spoken with his boss about someday possibly taking over the business. The whole issue with Joe is just getting odder.

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

Jeff Endress wrote:Mark

If you REALLY are Joe the plumber, then I think you should go see an attorney and a CPA, because your concerns about growing your business in the face of a "tax increase" are pretty much unfounded.

Most small businesses (those NETTING 250K per year) are subchapter S corps., or LLC's. Those are pass through entities whose NET profits are reported by the owners directly on their 1040.

Which means, in essence, that you could gross a billion dollars at Joe's plumbing, LLC, and as long as you had deductible expenses for salaries, benefits, new trucks, etc. of 99,750,000. Since only 250K would flow through to your personal return, there would be no additional tax.

So Joe's concern isn't his ability to grow his business, it his ability to profit more from it, without an additional tax bite.

Jeff

Obama dropped the ball on replying to that. at least, at the debate.

Maybe Joe the Plumber has some connections. Maybe he can get a contract with the city that pays way more than it should.

John Stewart the Daily Show made a funny about Joe...noting that in 12 hours he probably gave more interviews than Palin has done in 6 weeks! Essentially, we know more about a guy who was a one-stop on a campaign trip than one of the Vice Presidential candidates.