In a classic Seinfeld episode, Kramer damaged Jerry's stereo, then filed a claim, saying it was broken during shipment. Jerry questioned how he was going to make the post office pay for it:
Kramer: They just write it off.
Jerry: Write it off where?
Kramer: Jerry, all these big companies, they just write off everything.
Jerry: You don't even know what a write off is.
I think most of you know that businesses and individuals 'write off'' whatever they can to lower their taxable income. However, during the Presidential campaign, some people seemed to suddenly forget what they learned in Tax Code 101......we are taxed on taxable income, not gross income. And, we have a progressive tax.
Throughout the campaign, I kept hearing from middle and lower-income people that Obama was going to raise their taxes. Then when Joe the Plumber surfaced, small businesses were going to fail because their taxes would be raised. Poor Joe the Plumber....he wanted to buy a business that grossed $250,000 in annual revenues, and was concerned that his taxes would be increased. But his business would have to net over $250,000 in taxable income to get a tax increase. So Joe the Plumber didn't have anything tlo worry about.
I'm not a CPA, but I am a small business owner, so I know a little bit about taxes and deductions. To reach my taxable income, I deduct all operating and overhead expenses, such as salaries & benefits, insurance, rent, utilities, supplies, advertising, and auto expenses. I can tell you that any small business netting $250,000 in taxable income is doing quite well.
What some people also seem to forget is that we are taxed on a progressive basis. If taxes are raised on small businesses earning $250,000 in net income, only the amount over $250,000 would be taxed at the higher rate. Everything under that would be at the lower rates.
So poor Joe the Plumber.....I wonder how much his company's gross income would be for him to worry about having his taxes increased.
As far as individual taxpayers, Obama never said he was going to raise taxes. In fact, he always said he would lower taxes on the bottom 95%. As for the upper 5%.....he said he would readjust their taxes to the percentage they were during Clinton's administration.....which was 39.6% on the amount of taxable income over $372,951 (single, or married-filing jointly). Currently, that rate is 35%. I don't know about you, but I would love to make that much money in taxable income.
I don't see anything wrong with raising taxes on the upper 5%, especially during a time of war. Looking back through history, between the years 1940 - 1981, taxes on the top bracket fluctuated between 70% - 94%. In 1982, it dropped to 50%, and in 1987 to 33%. During WWII, taxes on the bottom bracket were between 19% - 23%. On the top bracket, they were 88% - 94%.
For some reason, people don't want to raise taxes on the super-wealthy, yet they don't seem to care that we are borrowing billions of dollars from foreign countries to pay for a so-called war in Iraq. Maybe they just don't know what a write off is.
Subscribe to:
Post Comments (Atom)
Unfortunatly I am not the most informed American but I am trying to improve, which is one of the reasons I enjoy your blog. I did hear recently that Obama is now saying he might not increase taxes on the weathiest, but let Bush's plan expire. I'm sure you know more about this subject. What do you think about that?
ReplyDeleteI need to find out more about that before I make a judgement call.
ReplyDeleteThom Hartmann had a great guest on his show today who talked about how, throughout history, the economy is better when taxes are raised, and goes in the dumps when taxes are lowered.
A neighbor of mine wrote a Letter to the Editor to our local paper a few months ago, and I just had to email him when I read it to thank him for writing it! It was basically this: Quit whining about paying your taxes, when we all know you're going to whine about all the services that you want your local/state/federal government to provide you with. I dare you to go to another country and get as much offered to you by the government, while paying less in taxes. If you want to send your child to a *free* public school, and you want that child to get a good education, then guess what? You need to pay taxes to the government so that those schools can be funded. I find it amusing that the people who gripe the loudest about paying taxes are often the same people who gripe the loudest abut how they are entitled to more/better services from the government.
ReplyDeleteWell said!
ReplyDeleteWatch for my post in a few days titled "Taxes...Part Deux"
FIVE asked:
ReplyDelete"I did hear recently that Obama is now saying he might not increase taxes on the weathiest, but let Bush's plan expire. I'm sure you know more about this subject. What do you think about that?"
Here's the transcript from Tom Brokaw's interview with Obama this morning on Meet Th Press (12/7/08:
MR. BROKAW: Have the economic conditions changed what you hoped to do about taxes? When Bill Daley, your friend and economic adviser, was on this broadcast two weeks ago, and I raised the question about whether you would raise taxes on those earning $250,000 or more a year, he gave a very strong indication that you would probably not do that, you would let the Bush tax cuts play out until 2011. Is that your plan?
PRES.-ELECT OBAMA: Well, understand what my original tax plan was. It was a net tax cut. Ninety-five percent of working families would get tax relief. To help pay for that, people like you and me, Tom, who make more than a quarter million dollars a year, would play--pay slightly more. We'd essentially go back to the tax rates that existed back in the 1990s. My economic team right now is examining do we repeal that through legislation? Do we let it lapse so that when the Bush tax cuts expire they're not renewed when it comes to wealthiest Americans? And we don't yet know what the best approach is going to be, but the overall thrust is going to be that 95 percent of working families are going to get a tax cut, and the wealthiest Americans, who disproportionately benefited not only from tax cuts from the Bush administration but also disproportionately benefited when it comes to corporate profits and where the gains and productivity were going, they are going to give up a little bit more. And it turns out that...
MR. BROKAW: But right away or 2011?
PRES.-ELECT OBAMA: Well, as I said, my economic team's taking a look at this right now. But, but I think the important principle--because sometimes when we start talking about taxes and I say I want a more balanced tax code, people think, well, you know, that's class warfare. No. It, it turns out that our economy grows best when the benefits of the economy are most widely spread. And that has been true historically. And, you know, the real aberration has been over the last 10, 15 years in which you've seen a huge shift in terms of resources to the wealthiest and the vast majority of Americans taking home less and less. Their incomes, their wages have flatlined at a time that costs of everything have gone up, and we've actually become a more productive society.
So what we want to do is actually go back to what has been the traditional pattern. We have a broad-based middle class, economic growth from the bottom up. That, I think, will be the recipe for everybody doing better over the long term.