Does Obama know the definition of "small business?"

I'm glad to see that some people are finally starting to wake up to Obama's horrible tax plan. I think McCain did a good job last night of outlining how dangerous his plans are.

The fact is that people are going to stop wanting to achieve things under his plan. As someone else has mentioned here, what is the point of becoming a doctor, or lawyer, or starting a business, or creating new products if everything you work for is just going to be taxed away and given to people who do nothing to earn it?

What Obama is basically doing here is putting a cap on the American Dream. He claims he will do all he can to support the American Dream, but only until it reaches $250,000. After that, suddenly you are the enemy and must pay for your greed.

It's ridiculous to me that anyone could support his tax plan.

reply to post by Animal


It is fewer than 100 employees....

an organization that is small in relation to the potential market size, managed by its owners, and not part of a larger organization. There is no single official definition of what constitutes a small business. A standard definition for the size of small business is one having fewer than 100 employees.

Source

The legal definition of "small" often varies by country and industry, but is generally under 100 employees in the United States and under 50 employees in the European Union.

Source

There are approximately 25.8 million businesses in the United States and over 99 percent of all employers are
small businesses, according to the U.S. Small Business Administration.

Obama's Website

Or, if you go by the Small Business Association's definition, it's fewer than 500 employees.

The SBA defines a small business as one with fewer than 500 employees.

Source





[edit on 10/16/2008 by skeptic1]

My understanding is that the 250k mark is NET, not GROSS. to be determined AFTER business expenses. And the 42k/year tax increase is a myth perpetuated by the McCain campaign. There's a lot of misinformation in this thread that I didn't expect to see, especially since there's been so much fact checking going on lately.

For example, lets say I do have 25 employees, and paying them each 30k a year. That's 750k a year just in payroll, that my company would have to earn just to pay my employees. I think for a company of that size, another 250k is reasonable amount of business related expenses. That puts my companies earnings at a cool million. However, I haven't made any money yet, and I'm STILL 250k away from the tax increase, under obama's plan. So, my company, with 25 employees, in this example would need to earn 1.25 million to even get close to a tax increase.

I'm also a small business owner. And my taxes may go up under the Obama tax plan. I do business with businesses (as opposed to consumers) and have seen our revenues decline since this whole mess started back in late 2005. What my business will do going forward has far more to do with the state of the economy than it does my tax situation. If the state of the economy doesn't get fixed tax rates will be a moot point.

"Uber-tax"??? Did I miss something? This sounds like political hysterics to me. I can only speak for myself but the disparity of wealth in this country has increased alarmingly in recent years. That is NOT a good thing and is not good for the country. ANY country. People try and paint this issue as taking money from the hard-working, ambitious achievers and handing it out to the highschool drop-out, lazy-a$$, drug smoking reprobates. Excuse me? That position is ignorant. Shifting the tax burden is in no way the same as handing out wads of cash to underachievers. And to suggest that it is belies the REAL motive behind such comments.

This country has increasingly been a 'friend' to business by virtue of legislation, trade policies, tax policy, de-regulation... pretty much anything 'they' want. Hell, they're paying for it afterall. And where has that gotten us? Have things gotten better or worse? How are American companies doing relative to their foreign competitors? Where are our jobs going?

So I have to ask myself, should I support policies that are self-serving and better for me personally or policies that are in the best interest of country as a whole? I know that my company will do better (and consequently so will I) when the economy is in good health. The prevailing policies have done nothing but erode the economy and concentrated wealth upward. It hasn't worked for the country --- for a few, yes, but not for the country as a whole. And not for me.

Originally posted by jtma508
I'm also a small business owner. And my taxes may go up under the Obama tax plan.

So your take-home is over 250k? I really want to clarify that tax issue for myself. As for me, I make much less but who knows what nex year brings.

reply to post by Unit541

If the company is actually that profitable, and depending on how the business is organized legally, Obama’s plan would indeed raise his federal income taxes, and Obama conceded as much during the exchange. As we’ve written before, small businesses commonly are organized in such a way that their owners file business taxes as individuals. So if Joe’s plumbing business earns more than $200,000 per year (or $250,000 if Joe is married and files tax returns jointly) then his taxes would indeed be higher under Obama's plan than under McCain's.


Source

Small businesses:

1. Represent 99.7 percent of all employer firms.
2. Employ about half of all private sector employees.
3. Pay nearly 45 percent of total U.S. private payroll.
4. Have generated 60 to 80 percent of net new jobs annually over the last decade.
5. Create more than half of nonfarm private gross domestic product (GDP).
6. Hire 40 percent of high tech workers (such as scientists, engineers, and computer workers).
7. Are 52 percent home-based and 2 percent franchises.
8. Made up 97.3 percent of all identified exporters and produced 28.9 percent of the known export value in FY 2006.
9. Produce 13 times more patents per employee than large patenting fi rms; these patents are twice as likely as large firm patents to be among the one percent most cited.

Source: U.S. Dept. of Commerce, Bureau of the Census and International Trade Administration; Advocacy-funded research by Kathryn Kobe, 2007

Source

It appears to be gross, not net....especially since most small businesses file business taxes as individuals. They would base their taxable income off their AGI like individuals do when they file their tax returns every year.

Under Obama's plan to let the scheduled 2011 tax rate hikes occur, and his plan to raise the self-employment tax on those making more than $250,000, the S corporation rate would rise from 35 percent to 39.6 percent. The sole proprietor and partner rate would rise from 37.9 percent all the way up to a staggering 50.3 percent.

Source




[edit on 10/16/2008 by skeptic1]

reply to post by skeptic1


I think a lot of people are confusing "profit" with "receipts", and failing to define "gross" correctly. You could, accurately describe the basis for his taxation as gross, however to be completely accurate, it must be emphasized that "gross" in this sense refers to AGI, or "adjusted gross income", more commonly described as "after-expense" income.

It's after-expense earnings. Period. That said, if you end up taking home that enough to be affected tax-wise, personally, it's a problem I'd actually like to have.

I am NOT an Obama supporter, and I certainly will not be voting for him, however it is clear to me, that McCains tax plan will adversely affect many more "Joe Plumbers" than his will.

reply to post by Unit541


I remembered the AGI part after I posted. It is now edited and corrected.

So, basically, the AGI for a small business is Gross Income minus Business expenses (that gets you your earnings) minus half of the self employement tax (if applicable).....I think.



[edit on 10/16/2008 by skeptic1]

reply to post by buddhasystem


Come on people... for the love of God THINK! How can you tax a company based upon gross? What if they're a bicylce retailer that has, say, a 30% margin on their bikes. You honestly believe you'd get taxed at a rate higher than your margin? Please.

Even as a sole-proprietor you report your business earnings (after expenses) on Schedule-C. Your net earnings/loss are carried over to your 1040 as 'Adjusted Gross Income'. That is what you calculate your taxes against. To suggest otherwise is ridiculous. Not to mention mathematically unsustainable.

So the 'small businessman' paying the 'uber-tax' carries-over more than $250K after all business related expenses. Then deducts his personal expenses on his 1040 (mortgage interest, itemized deductions, child credits, etc.). If he still has a $250K exposure perhaps he should have invested more in his business operation to lessen that exposure. That's what businesses do now. Ask an accountant. He could have replaced some equipment, did more marketing, hired someone, increased wages, paid a bonus or two, contributed to employee healthcare or retirement.

Again, the whole concept behind the plan is to incent businesses to put money back into the economy. Some people don't like that idea. I, for one, feel it's better for the country if not for some individuals.

My husband and I own a restaurant. We put our house on the line to do this. We gross over 2 million a year but make less than our top waiter. We work from morning to late at night. We have 60 emplyoyees and can only afford insurance for our managers and their families with a $1700 yearly deduction catastrophic coverage no dental or vision etc. We are lucky to meet payroll every month. We cannot afford to update AT ALL !! You cannot just keep raising your menus prices. Minimum wage in Washington State will be $8.55 in January. If Obama raises our taxe at all or makes us carry health insurance for our dishwashwers etc. we will shut the doors.
This restaruant has been in business for 30 years. Most people think we are rich and are surprised when the see our cars etc. So..... if Obamas tax in our gross and not net we will be laying off all 60 employees and losing our business that we gave our life to.
Gross pay does not at all represent net pay. We have to pay every tax on the planet and all our bills etc. It takes almost 98% of our gross.
So if you want small businesses nationwide to shut down a vote for Obama might just do that.
Obama always uses waitresses as a example of "sharing the wealth"
Well our wait staff may need to "share the wealth" with us since in Washington State the average more than $21.00 per hour and don't even claim all they make.
Yah Obama ????

reply to post by jtma508


Thanks for your clarification. That's about wheat I expected. Looks like you find Obama's plan reasonable, and if so... I do, too.

reply to post by buddhasystem



Hey, I'd rather not pay any taxes, ever! But lets face facts: These clowns are handing out hundreds-of-billions of dollars on an almost weekly basis. That on top of the roughly $1T they've already handed-out. That on top of the $10B a month for the 'wars'. On top of a $450B+ defense allotment. You get the idea.

We've got to pay for all this somehow. To believe it can be done without raisng tax revenue especially as the economy softens is delusional. They can scalpel all they want. They're not going to find THAT kind of money. And keep in mind we need to think about chipping away at the Bush deficit as well.

Waaaaayyyyy back in the beginning of the campaigns Ron Paul specifically warned about this coming catastrophe. He was laughed at. He said then that there were going to have to be some difficult and painful adjustments made to turn the situation around. Unless they're hiding a majic wand we're going to have to rely on simple mathematics. The tab is due and now we have to start paying it off. It sucks be we elected these asshats.

Don't forget...Even if your company makes $227K to $603K per year... You're going to pay $12 more. That's TWELVE DOLLARS. That's your tax increase.

Here is the comparison chart.

Source



Comparison of McCain and Obama's Tax Plans

[edit on 16-10-2008 by Benevolent Heretic]

So, Obama's plan would raise taxes on small businesses if the owner files business taxes with their individual taxes and their AGI is above:

$200,000.00 per individual (if filing single)
$250,000.00 per couple (if filing a joint return)




[edit on 10/16/2008 by skeptic1]

reply to post by skeptic1


yes. by twelve dollars.

reply to post by Unit541

Under Obama's plan to let the scheduled 2011 tax rate hikes occur, and his plan to raise the self-employment tax on those making more than $250,000, the S corporation rate would rise from 35 percent to 39.6 percent. The sole proprietor and partner rate would rise from 37.9 percent all the way up to a staggering 50.3 percent.

Source

So, is the problem with Obama's actual tax rate hike (as stated by BH above, and $12 isn't anything) or is it with his proposed hike on the self-employment tax rate? $12 ain't nothing, but the hike in the self-employment tax rate is rather substantial.



[edit on 10/16/2008 by skeptic1]

Originally posted by buddhasystem

Originally posted by Blaine91555
It's almost 8:30 PM here and I've been at it since 9 AM, a normal day for a small business owner, so I'm heading home if the phone quits ringing

Blaine, from the time-stamp you would appear stationed outside of the 48 US states, care to comment on that? Is that Hawaii?

Sorry, I had to leave. I'm in Alaska. As to income, everything beyond expenses and payroll is considered income. If I want to expand, update or improve it comes out of my income. Even a box of paper clips comes out of my pocket.

Elections are difficult for me as I lean to the left on social issues, but on fiscal issues I know that the right is my best hope.

Any motivated person can be self-employed. It just takes desire. I started this with $185 and I've never been in red ink. I had a few years experience in managing a similar business beforehand.

Originally posted by Blaine91555Even a box of paper clips comes out of my pocket.

How is your box of paper clips not an *expense*? If paper clips are used by your business, in the course of business, it's an expense. The gas you used driving to the store to get the paper clips is also an expense. The repair bill to fix the car that burned the gas that propelled you to the store to pick up the paper clips is also an expense.

This is getting a little off topic, but the tax code can be used to your benefit as much as to your detriment. As a small business owner, there's really not a whole lot of expenditures that cannot be considered business expenses. Too many small business owners (myself included, when I started) are not aware of the immense importance of having a really good accountant. Unfortunately, 95% of the CPA's out there don't comprehend any more of the tax code than we do.

reply to post by Anonymous ATS


I hear you. I have friends in the restaurant business and know how hard it is. But again, certain people are trying to make you THINK you'd be taxed on your gross but even a modicum of pencil-and-paper will quickly make anyone realize that is hoccum. In your case you'd most likely find your taxes lowered. It will be against your AGI which, based upon your post, isn't remotely close to $250k.

reply to post by Blaine91555


Blaine - I too am extremely curious about this. Expenses for a business in my area (eastern US) can include a wide array of items used for the business. I can't see how any "updating" or standard supplies would have to come out of your own pocket so to speak. They should all be legitimate business expenses.

I'll be following this thread closely - I am self employed and do contract work as a sole proprietor.