Your boss needs to cut your pay by 20% for a year or the company will close

[SoCalDem]

You agree... a year passes and he announces that he's giving you a 20% raise... Your salary is now where it was a year earlier ( EDIT: actually less because the 20% is figured from the new rate)..

did you get a 20% "raise"?

Of course you didn't.

and RE-INSTATING the tax rate to what it was before the TEMPORARY cut is NOT "raising your taxes".

The rich have gotten a 10 year long free ride, and now they have to start paying for their tickets..

If Bush had wanted it to be permanent, he should have had it legislated differently.

It's like having a favorite restaurant run by friends who let you eat there for free.. if they sell the place, you will no longer get free meals.. There's new management, and the free meals are in the past.

I am ashamed of our leaders who cannot seem to frame this issue to our advantage:(.. It's incredibly simple..


EDIT..Thanks to the "math-y" DUers:hi:

[hack89]

1. Except in one case my standard of living would get better

while the other would leave me with less money.

[SoCalDem]

3. government is macro

individual is micro.

Obama wants to leave the under-$200K rates in place..

[hack89]

8. Those rates impact many small businesses

In some states a third of business taxes comes from individual income tax on small business owners.

Why should my friend who is struggling to keep his small paint store alive be lumped in with all the high earners? He employs 4 people from the income you want to tax.

[SoCalDem]

10. If his PROFIT is over $200K, he shoud pay more

What we need is a new definition of what a "small" business is.

Micro ...up to 4 employees
Mini.......up to 10 employees
Small....up to 15 employees
Medium...up to 50 employees

over 50 is NOT small..

If your friend pays 4 people and still earns 200K profit after all his business deductions, he should be paying more than his employees..fair is fair..

[hack89]

17. self deleted

[Statistical]

19. Taxes aren't going up to 100%.

They are going up 3% (not 30%, only 50%, but 3%) and then only on the PURE PROFIT ABOVE $200,000.

So $200,000 in PURE PROFIT = $0.00 more taxes.
$500,000 in PURE PROFIT = $9,000 more taxes. Still leaves him hundreds of thousands of dollars to grow the business.

He can't be "struggling" AND facing tax increase.

Unless you think $500,000 cold hard cash in the bank each year is "struggling". Do you?

[SoCalDem]

35. "There are none so blind as those who will not see"

:rofl:

[SoCalDem]

20. Is he bucking to be the next Starbucks or Walmart? or is his business

there to provide income for his family & his employees.. Why does a business HAVE to keep "growing"?


Extreme "growth", just for the sake of growth often sinks a business..

There is something to be said for stability:)

[hack89]

23. True - a job here and and a job there.

what's the big deal in an era of 10 percent unemployment. I guess we can just wait until Walmart puts him out of business - I hear they have no problem with growth.

[Statistical]

26. He isn't struggling if his taxes are going up.

If his taxes are going up he isn't struggling.
If he is struggling then his taxes aren't going up.

See how the system "fixes" itself.

TAXES ARE PAID ON BOTTOM LINE PROFIT not on sales, or general revenue, or even gross profits. Not on wages, or expenses.

Gross revenue = Total of all paint sold
Gross profit = Gross Revenue - cost of product (price of paint from wholesaler).
Net profit = Gross profit - all expenses (wages, advertising, vehicles, business expansion, financing, insurance, etc)

Taxes are on net profit/income.

TAXES ARE ONLY GOING UP ON THOSE MAKING $200,000 or more (net income not sales) and then ONLY on the income ABOVE $200,000.

How exactly if your friend "struggling" if he is making $200,000 a year. $2 million a decade. $8 million lifetime revenue over the average working lifetime. On what planet is that "struggling"?

Lastly you do understand taxes are only going up 3% and only on the PROFIT above $200,000 not even all the PROFIT.

Thus if he makes $201,000 profit then his taxes would go up a whole $30. That right not $30,000, not even $3,000 but $30 dollars ($201,000 - $200,000 = $1000 * 3% = $30). If he makes $300,000 in profit then his taxes would go up by a whole $3,000. If your "friend" is so stupid to lay a worker off (and lose hundreds of thousands of dollars in productivity thus massively affecting his bottom line) to avoid 3% tax increase well I doubt he will be a business owner for very long anyways.

[hack89]

27. We were talking about his ability to grow his business

the poster made the idiotic post that small business shouldn't worry about grow as if the job fairy will take care of unemployment.

[Statistical]

30. I agree that was a foolish comment but is a canard.

Anything he spends on expanding his business is a cost and thus isn't taxed.

Say he made $300,000 this year but before end of year he buys a new warehouse. The cost of that warehouse is "tax free" because it is an expense thus it reduces his profit and the amount he is taxed on.

Back to your original point:

"Why should my friend who is struggling to keep his small paint store alive be lumped in with all the high earners? He employs 4 people from the income you want to tax."

Two fallacies here.

1) he isn't facing higher taxes if struggling. If anything there are new tax credits for small businesses who expand hiring.

2) the money he is being taxed on is the profit AFTER paying wages. "He employs 4 people from the income you want to tax." - False. He pays wages. They are an expense. His cold hard cash in profit at end of year is what is taxed.

No profit = no taxes.
Little profit = little taxes.
Lot of profit = lots of taxes.

Your friend will hire people if there is demand.
He will hire people if there is demand for more sales even if his tax rate was 90%.
He won't hire people if there isn't demand for more sales even if his tax rate was 1%.

Businesses (all businesses) hire people because they NEED (not want) more labor in order to maximize profits.

[haele]

31. If he "grows" his business, anything over $200K he's worried about

will be sunk back into his business rather than becoming profit. That 3% discount he is no longer going to be realizing will be only on what he personally takes home after he pays his business accounts.
So if he's making more money, but pumping it back into his business, he won't see the increase.

It's only the income he takes home to put in his own personal bank account that he will see the increase on. And, BTW - his personal bank account should not be being used to "grow his business" - that's what business accounts are for. A business account is not a personal ATM, even though many people with poor business practices use it as such.
(using the generic "he" to indicate any business owner, male, female, or transgender/non-gender)

Haele

[Hello_Kitty]

33. Whereas you're arguing that the Bush Tax Cut Fairy will take care of it.

When we have plain evidence that it won't.

[bergie321]

11. Income Taxes

Are on INCOME. If your "friend" was "struggling", he would not have an income (profit) of over $250,000 per year.

"He employs 4 people from the income you want to tax."

No he doesn't. INCOME is after expenses.

[Kweli4Real]

12. I can't think of a better way to respond than ... Bullshit ...

Those "small business owners" would not be affected by the tax cut expiration because they are earning less than $250K. Those earning more than that really need to consult a Tax/Business Entity Attorney.

[Kweli4Real]

15. I must Apologize ...

I get so frustrated when some numbskull comes with that "I have a friend that ..." crap. Why can't they just be honest and say: "I really don't understand this stuff, but rush/glenn/cavato says that it'll hurt small business."

[hack89]

24. Fuck you. You don't need to apologize for me thank you very much nt

[AngryAmish]

40. I must apologize for his rudeness

It is beyond the pale.

[hack89]

41. So snarky, smarmy, oh self righteous apologies for third parties is ok

but honest anger is not? Got it.

God how I hate the pious passive aggressive bullshit that sometimes pervades this board.

[Statistical]

16. Your friend taxes aren't going up if he is "struggling".

"Why should my friend who is struggling to keep his small paint store alive be lumped in with all the high earners"

He isn't.

Income is what is taxed. Say the guy grosses $20 million in sales a year. WOW he must get taxed a lot... nope he doesn't pay tax on revenue. Ok so say his gross profit (revenue - product cost) is $3 million. That must be a lot of taxes. Nope he isn't taxed on gross profit. He deducts all his costs. So after he pays for the inventory, advertising, employees salaries, rent on building, vehicles, fuel, insurance, etc. Say he is left with $500,000.

That isn't struggling is it? End of year his bank account has cool half million in it. Would you be upset to "struggle" with a half million going into your bank account each year? I wouldn't mind it.


SO if he is in that situation then his taxes are going up but only going up 3%. It isn't even 3% it is 3% on the money. It is just 3% on the money ABOVE $200,000.

Now if he is struggling then he didn't make $200,000 or more in PURE PROFIT at the end of the year did he. In that case his taxes don't go up a single nickle.

He can't be struggling AND facing a tax raise on the rich. Struggling != rich. Rich != struggling.
He can be struggling OR he can be facing a tax increase not both.

[Hello_Kitty]

22. Apparently there are a lot of business owners who are unaware they can write off expenses

As evidenced by the number of "friends" they have on the internets who insist that a slight increase in the top marginal income tax rate will destroy their businesses.

:crazy:

[Statistical]

25. It is strange they have managed to stay in business.

You know paying taxes on 100% of their revenue.

Maybe that is why all these "friends" are "struggling".

[SoCalDem]

28. and with all the movin'on up, as they experience constant ":growth"

:rofl:

[druidity33]

32. i think his "friend"

has either a gambling or drug problem. Maybe just addicted to greed and excess (new house/boat/wife every 2 years)... but probably gambling or drugs.

;)

[Statistical]

34. Well in that case he might be struggling but it isn't because of the taxes.

He could declare himself a professional gambler to write off those losses. I don't think you can declare youself a professional drug user or professional womanizer though. Maybe he could consult Mel Gibson for some financial advice?

[Hello_Kitty]

21. If he's struggling to stay open yet reports that much income he needs a new accountant.

What is he, not writing anything off as expenses?

[SoCalDem]

29. or a new business plan

:rofl:

[Skink]

2. They already did that.

salary down more than 20 percent. Normally it does better in the 4th quarter.

[zipplewrath]

4. I always reframe it

I get the "largest tax increase" or "tax tsunami" or any of that and I merely say "you mean returning to the tax rates of the '90s when we had surpluses and a booming economy?"

[CoffeeCat]

5. our leaders won't frame the issue in this way...

...because they are not on our side.

They are in bed with the corporations that are receiving these tax breaks. It's one
big anti-democratic orgy...

...and you nor I are invited.

They use us for votes, when they need to continue their party until the next election cycle.

Other than that, we are inconsequential.

[cbdo2007]

6. doesn't matter

You could send everyone in the U.S. a $100 bill and the Repubes would still say you "raised taxes" because you didn't send $150.

[Statistical]

7. Technically you are still lower.... sorry the math is driving me crazy.

Starting Salary * 80% * 120% < Starting Salary

Example:
$40,000 salary
20% pay cut = $32,000
20% pay raise = $38,400
$38,400 < $40,000

Only the math nerdy would care though.

[T Wolf]

9. In addition, in your example, you lose 20% but only gain back 16% (20% x 80%).

So, guess what? You lose in both directions and wind up below where you were, forget about where you would have been. Who woulda thunk?

[Kweli4Real]

13. That was Statistical's point!

[SoCalDem]

14. Okay you math-nerds.. I fixed it & credited y'all

:rofl:

[TBF]

18. I don't understand why there are so many threads on this.

What does Obama et al not understand? He's in charge now and he can choose to let those tax cut expire. Not only should he let them expire, but then he should proceed to raise the tax rates for the highest earners. All this crap about "then they can't hire anybody" is just that - crap. That has nothing to do with their individual income taxes.

[maryf]

36. Planned obfuscation?

as in everything they do? Tax the rich, back to 1960's rate...they still had their mansions and limos...hmmm, come to think of it, tax them more!!

[SoCalDem]

37. It's the "spread"

When businesses were owned by individuals, they often lived within the community..they had nicer cars & houses & their kids had better clothes. They took better vacations & more of them, but the spread between the rich & the poor was not as wide as now.

When these corporations we see on the financial channels are still making HUGE profits, with scaled down labor AND dropping sales (if we are to believe the numbers) something just is not right..

They have been screwing us all for decades, saying they could not "afford" raises & they HAD to break the unions and all the other drivel...because in this market,m they should be struggling as well.. The books are still being cooked..trust me.

[maryf]

38. preaching to the choir here! but thanks anyway!

Hard to know who's singing what song around here at times... :)

[TBF]

39. I remember those days - growing up in a small town

in the 60's-70's. All the kids went to public school together & it's just as you described. I grew up in a very rural area in the midwest. When I moved to a big city in the 80's the discrepancy between rich & poor became much more evident to me.