I asked this in another thread earlier, and there was no response. Maybe someone here knows? TIA:
I'm hoping someone who knows can answer this question:
A big Republican talking point is that Obama's tax for those earning $250,000 or more includes any business which reports this as gross income. I have heard Dems deny this. What is the truth?
If it is not true, and we're dealing with individuals only, while I am still against it, I will be enormously relieved. This will not hurt the economy nearly as much as I thought (though it's hard to see how it will help things, unless Obama was willing to use the new revenue to decrease, rather than increase spending.)
If it is partially true, meaning it includes businesses who earn $250K or more as net income, this IMO will be bad for the economy, though not extremely bad. But it's likely it will prevent an increase in jobs, which is something Obama says is important to him. How can small businesses afford to hire new people when their costs on current income are about to increase?
If it is completely true (meaning the tax is on business gross income) this IMO will be extremely bad for our economy. Not only will small businesses be unable to hire new people, many of them will most likely have to fire existing people to make ends meet. Some companies will no doubt go out of business. I question whether this strategy would in the long run increase the amount of revenue the government receives. It will cause misery for all parties.
So I'm hoping it's not true. Does anybody know what the facts are?
From the official Obama website faqs on his approach to taxes for small businesses:
Do Small Businesses pay taxes on their gross revenues or their net income?
As a small business owner who claims small business income on your individual tax return (whether through a sole proprietorship, partnership, or S-corp) you pay individual income taxes only on your net income — or profit — and not on your firm’s gross revenue. Accordingly, when Obama says that he would roll back the Bush tax cuts for all couples earning more than $250,000 a year, these income figures include only net income that a small business owner takes home. Because net income is usually far lower than gross revenue, even if your revenue is above $250,000 you are still likely to get a tax cut under Obama’s tax plan. If you are a small business owner using the tax calculator, you should select your income level based on the net income you claim — your revenues minus your costs — to see how you would fare under each candidate.
OK, that's good, so it's not the catastrophic third option I was afraid of. The GOP is lying, big surprise there. Thanks, Gr00vus.Still, it's not a good thing. It seems pretty clear to me that most of the new jobs in this country would be from companies that net more than $250k. If you tax these companies more, aren't you reducing the ability of these companies to do so? Unemployment will surely increase, right?
That goes into a whole different area which would include policy on energy and job creation through retrofitting car plants to build high fuel efficiency cars and creating green jobs, etc. But you've got to look where we're at right now and realize that old models are not working and McCain doesn't really have any new ideas. As for job creation under Obama's tax policies, here is a taste:II. TAX CUTS TO ENHANCE COMPETITIVENESS AND HELP CREATE JOBS
Barack Obama’s tax plan will help small businesses grow and will encourage job creation in America. He will
directly cut taxes for small business and for firms that invest and create jobs in the United States, will relieve
healthcare costs for all firms and will reward investments in innovation. Barack Obama pro-business tax
policies include:
o Eliminating Capital Gains Taxes for Entrepreneurs and Investors in Small Business. Barack Obama
understands that small businesses are the engines of our economy, and he will eliminate all capital gains
taxes on investments in small and start up firms.
o Cutting Corporate Tax Rates for Firms that Create Jobs in America. Barack Obama will repeal tax
breaks and loopholes that reward corporations that retain their earnings overseas, and will use those savings
to lower corporate tax rates for companies that expand or start operations in the United States.
Printed in House
Paid for by Obama for America
o Offering a Small Business Healthcare Tax Credit: To help small businesses compete in the global
economy while still providing quality health insurance, Barack Obama will offer a new refundable 50
percent health tax credit on employee premiums paid by employers. His comprehensive healthcare plan will
relieve health costs for all firms by bringing down national healthcare costs by $2,500 per family, annually.
o Making the R&D Tax Credit Permanent. Barack Obama will make the Research and Development tax
credit permanent so that firms can rely on it when making decisions to invest in domestic R&D over multiyear
timeframes.
III. CUTTING TAXES BELOW THE LEVEL UNDER RONALD REAGAN WHILE RESTORING FISCAL
RESPONSIBILITY
Barack Obama will keep taxes low for everyone, while working to reform our tax code and make sure that
everyone pays their fair share. Obama also believes that after eight years of reckless fiscal policies that
squandered historic surpluses and added $4 trillion to the deficit, it is vital for candidates to put forward specific
ideas on how they will pay for their proposals without passing on further deficits, debt, and a weaker economy
to our children. That is why he has called for closing inefficient tax loopholes, cracking down on offshore tax
havens, and repealing a portion of the tax cuts passed in the last eight years for families making over $250,000.
In net, even after these tax changes, the Obama plan is a tax cut. His middle class tax cuts are larger than the
loophole closers and rollbacks that he has proposed for families making over $250,000. According to the Tax
Policy Center, the Obama plan would reduce taxes as a share of the economy to less than 18.2 percent - the
level of taxes that prevailed under President Ronald Reagan.v The Obama plan pays for these tax cuts by cutting
spending overall. Obama’s spending cuts include responsibly ending the war in Iraq, limiting payments to highincome
farmers, cutting subsidies for private plans in Medicare, reforming student loans, cutting earmarks to at
least the level they were in 1994, ending no-bid contracting, and phasing out unnecessary and duplicative
programs. He will also support pay-as-you-go budget rules and a constitutionally acceptable line-item veto to
cut pork-barrel spending. Overall, Barack Obama’s budget will reduce the deficit relative its current level and
its realistic future trajectory.
The fiscally responsible tax changes that Obama is calling for include:
o Broaden the corporate tax base and eliminate special preferences: Our tax code is riddled with special
interest loopholes that allow some corporations and wealthy individuals to avoid paying their fair share of
taxes. As President, Obama would move aggressively to close inefficient loopholes by taking steps that
include:
o Reforming international tax loopholes: including reforming deferral to end the incentive for
companies to ship jobs overseas and closing the offshore pension loophole;
o Closing domestic tax loopholes: including clarifying the economic substance doctrine and increasing
reporting of capital gains to close the tax gap;
o Eliminating special tax breaks for oil and gas companies: including repealing special expensing
rules, foreign tax credit benefits, and manufacturing deductions for oil and gas firms; and
o Closing other loopholes: including taxing carried interest as ordinary income, and closing the CEO
pay loophole.
o Cracking down on international tax havens: According to a recent Congressional investigation, offshore
Printed in House
Paid for by Obama for America
tax abuse costs this country up to $100 billion each year.vi Barack Obama has been a leader in the Senate on
designing efforts to crack down on tax havens by requiring greater disclosure of financial transactions in tax
secrecy jurisdictions. As President, Obama would work with Congress to enact meaningful legislation to
ensure that the Treasury and IRS have the tools they need to close down the use of international tax havens
for improper tax avoidance or tax evasion. This will save the United States tens of billions of dollars each
year.
"Sad" seems more apropos.
"Sad" seems more apropos.
"Sad" seems more apropos.
