Tax Facts....(not that there's anything wrong with them)

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.