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“Only a few percent of small businesses make more than $250,000 a year. So the vast majority of small businesses would get a tax cut under my plan.”

In Uncategorized on October 14, 2008 at 11:34 am

Watch out New Jersey we already have the highest taxes on small business……

http://www.patterico.com/2008/10/07/obamas-tax-plan-and-small-businesses/

Obama’s Tax Plan and Small Businesses

“Only a few percent of small businesses make more than $250,000 a year. So the vast majority of small businesses would get a tax cut under my plan.”

Barack Obama

The US Small Business Administration (SBA) defines a “small business” according to its average annual receipts or the number of its employees. Here are examples from the SBA’s Table of Small Business Size Standards setting forth the maximum average annual receipts by industry that a business can have and still be classified as a small business:

Crop production of all types — $750,000

Animal production except for cattle & chicken/eggs — $750,000

Cattle feedlots — $2.5

MChicken/egg production — $12.5

MForestry & logging — $7

MFishing — $4

MIrrigation, sewage, water supplies — $7

MHousing construction — $33.5M

Heavy and civil engineering construction — $33.5M

Dredging and cleanup — $20M

Concrete, framing, and other housing contractors — $14M

Car dealers — $23-29M

RV, motorcycle, & boat dealers — $7M

Furniture, hardware, clothing & sporting good stores — $7M

Electronic stores — $9M

Supermarkets, gas stations & department stores — $27M

Pharmacies — $7M

There are many more examples at the link. In addition, most of the industries in the Table — such as manufacturers of food, beverages, apparel, print, oil/gas, plastics, plumbing, machinery, computers, electronics, electrical, transportation, and furniture — are considered small businesses based on their total number of employees instead of average annual receipts. In those industries, the cut-off between small and large businesses ranges from 500-1,000 employees per business/industry.

It’s difficult for me to imagine a business that has 50 or more employees (let alone 500-1,000) that has receipts of less than $250,000 per year. And, given the SBA definitions of “small business,” it seems likely that many small businesses in a wide range of industries have receipts of more than $250,000 per year.

If so, it is appalling that Obama would imply that, if he is President, a small percentage of businesses exceed the $250,000 per year cut-off for increased taxation under his tax plan. In fact, the number of businesses subject to additional tax may be large and could well be the 50% number I think John McCain mentioned.

Small businesses are vital to the American economy and Americans’ livelihoods, and it sounds like Obama wants to tax as many as he possibly can.
– DRJ http://www.patterico.com/2008/10/07/obamas-tax-plan-and-small-businesses/

http://www.census.gov/epcd/www/smallbus.html

Employers and Nonemployers
About three quarters of all U.S. business firms have no payroll. Most are self-employed persons operating unincorporated businesses, and may or may not be the owner’s principal source of income. Because nonemployers account for only about 3.4 percent of business receipts, they are not included in most business statistics, for example, most reports from the Economic Census. Since 1997, however, nonemployers have grown faster than employer firms.
Table 1. Employers and Nonemployers, 2002

FIRMS 23,343,821 24,846,832 22,832,560,524
Nonemployers (firms with no payroll) 17,646,062 17,646,062 770,032,328
Employers (firms with payroll) 5,697,759 7,200,770 22,062,528,196

Nonemployer Statistics annually classify nonemployer firms by industry and geographic area (U.S., states, counties, and metropolitan areas.)

Joe the Pumber speaks out …

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  1. It started with Clinton.

    This crisis was caused by political correctness being forced on the mortgage lending industry in the Clinton era.

    Before the Democrats’ affirmative action lending policies became an embarrassment, the Los Angeles Times reported that, starting in 1992, a majority-Democratic Congress “mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains.”

    Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton’s secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.

    Instead of looking at “outdated criteria,” such as the mortgage applicant’s credit history and ability to make a down payment, banks were encouraged to consider nontraditional measures of credit-worthiness, such as having a good jump shot or having a missing child named “Caylee.”

    Threatening lawsuits, Clinton’s Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn’t a joke — it’s a fact.

    When Democrats controlled both the executive and legislative branches, political correctness was given a veto over sound business practices.

    In 1999, liberals were bragging about extending affirmative action to the financial sector. Los Angeles Times reporter Ron Brownstein hailed the Clinton administration’s affirmative action lending policies as one of the “hidden success stories” of the Clinton administration, saying that “black and Latino homeownership has surged to the highest level ever recorded.”

    Meanwhile, economists were screaming from the rooftops that the Democrats were forcing mortgage lenders to issue loans that would fail the moment the housing market slowed and deadbeat borrowers couldn’t get out of their loans by selling their houses.

    A decade later, the housing bubble burst and, as predicted, food-stamp-backed mortgages collapsed. Democrats set an affirmative action time-bomb and now it’s gone off.

    In Bush’s first year in office, the White House chief economist, N. Gregory Mankiw, warned that the government’s “implicit subsidy” of Fannie Mae and Freddie Mac, combined with loans to unqualified borrowers, was creating a huge risk for the entire financial system.

    Rep. Barney Frank denounced Mankiw, saying he had no “concern about housing.” How dare you oppose suicidal loans to people who can’t repay them! The New York Times reported that Fannie Mae and Freddie Mac were “under heavy assault by the Republicans,” but these entities still had “important political allies” in the Democrats.

    Now, at a cost of hundreds of billions of dollars, middle-class taxpayers are going to be forced to bail out the Democrats’ two most important constituent groups: rich Wall Street bankers and welfare recipients.

    Political correctness had already ruined education, sports, science and entertainment. But it took a Democratic president with a Democratic congress for political correctness to wreck the financial industry.

  2. Oh yes, but The One is here to save us by bringing real “Change” to the way Washington works.

    If you like the way Chicago is run, then you’ll love the way Obama runs DC once in office.

    Once Obama, Pelosi and Reid are done with us, all we’ll have is the “change” in our pockets.

  3. Comparing apples and oranges here. Obama is talking about income (profit). The numbers cited here are Revenue.

    I also think Obama is talking about personal income when he talks about $250K. For businesses of the size being discussed in this blog entry, you are talking about corporations. That is an entirely different matter. Frankly, I don’t know what his plans are for tax rates on such entities.

  4. LLC’s are direct pass thrus sorry but he isnt clear with his plan nor do i think he knows what he is talking about , Gross income to an LLC could be directly taxed so you are screwed!

  5. It’s not clear if Obama is talking about gross or adjusted receipts. It’s also possible that Obama (and McCain) were referring solely to individual small business owners who are taxed as individuals. I tried without success to find a clear statement from Obama on these issues. That doesn’t mean he hasn’t clarified them but I couldn’t find it.

  6. This 250 grand number is moot, because Obama voted twice in the 2009 budget resolution to raise taxes on anybody making $42,000 a year or more

  7. you people have lived in NJ too long let face it to a politician anyone that has a job is rich so welcome to national socialism

  8. It started with Clinton.

    Of course that’s what you would say.

    Even though Republicans have been in control in Washington for this entire decade, you still feel the need to find a Democrat to blame.

    Tell me, what part of the Clinton years bothers you so much — the peace, or the prosperity?

  9. 1137 9/11

  10. 11:37
    DID READ IT before your comment?

    “Threatening lawsuits, Clinton’s Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn’t a joke — it’s a fact.”

    AND MORE. Read the whole thing and then dispute the facts.

  11. Lying politicians like Obama say things vaguely so that they can say they didn’t say what they said in the future. Come on. Get with the program people.

  12. If Mr. Obama raises payroll taxes, that will effect all business payrolls, whether you’re Coke-Cola or a 7-Eleven with two employees.

    If Mr. Obama raise the Social Security tax minimum, everyone making over 110K will get a tax increase, not just the 250K crowd.

  13. He’s a Marxist. He’ll do for the USA what Stalin did for Russia. There are enough liberal anti-intellectuals in Ridgewood who would vote for him and hand him Bergen County. Why do you think we have the stupid school board and weak government that we have? Because liberals have moved into town and have given over to this kind of idiotic PC government.

  14. The previous comments highlight the problem with Obama. Why should we be unclear at this stage as to who the 250K cap will affect? The media is just so damned in love with the guy that the hard questions just aren’t asked. He gets powder-puff questions and even if he does occasionally get a tough one, he just responds with very high level rhetoric.

    Even if you make less than 250K, you are going to get taxed liked you’ve never been taxed before. There are so many ways to tax us other than income tax.

    If you think that Obama is going to be a return to Clintonomics, forget it. Obama is so far left that he makes Clinton look like a Republican.

    Just imagine, no checks and balances. Nancy Pelosi and Barack Obama. You are going to share your wealth with millions of dysfuncional types.

  15. I heard that comment during the debate and laughed out loud. It does not matter whether the $250K references gross receipts, net income or personal income of the business owner (which is the most likely meaning). Many small businesses are sole proprietorships and thus the personal income and net income are one and the same. The truth is exactly the opposite of what Obama stated. Very few small business owners actually make less than $250K.

    Of course, since 40% of americans pay no income tax at all, Obama’s claim that 95% of Americans will get a tax cut is an intentionally misleading statement (read lie). I have no doubt that Obama is an intelligent individual and understands the facts very well. The problem is that most Americans, to whom he is appealing with his “class warfare” rhetoric, are not and accept his statements as truth. Essentially, what Obama is proposing for the 40% who pay no taxes is a tax credit, to which they are not entitled. This is otherwise known as “redistribution of wealth”.

    The Democrats seem intent on discrediting the experience of the Republican VP candidate, as if she was running against Obama. Not only does this man not have the foreign policy experience needed to be a modern day President, his domestic economic policies (particularly on taxation) will be devastating for our already crippled economy.

    I would like to ask Obama if he thinks that a Ridgewood resident, working in NYC with a family of 4-5 , who makes $250K is a member of the “rich” that he likes to vilify. I have news for him, such an individual is “lower-middle income” by college financial aid standards and is FAR from “rich”. Perhaps it is different if that individual lives in rural America. But, Obama’s whole platform fails to make sense in the majority of metropolitan areas across the country, particularly the northeast.

    While many voters may not like either candidate. I cannot imagine how any educated voter could support Obama, when one considers the entirety of his platform, or lack thereof.

  16. Obituary printed in the London Times reads as follows:

    Today we mourn the passing of a beloved old friend, ‘Common Sense’, who has been with us for many years. No one knows for sure how old he was since his birth records were long ago lost in bureaucratic red tape. He will be remembered as having cultivated such valuable lessons as:

    Knowing when to come in out of the rain; why the early bird gets the worm; Life isn’t always fair; and maybe it was my fault. Common Sense lived by simple, sound financial policies (don’t spend more than you can earn) and reliable strategies (adults, not children, are in charge).

    His health began to deteriorate rapidly when well-intentioned but overbearing regulations were set in place. Reports of a 6-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition.

    Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children. It declined even further when schools were required to get parental consent to administer sun lotion or an Aspirin to a student; but could not inform parents when a student became pregnant and wanted to have an abortion.

    Common Sense lost the will to live as the churches became businesses; and criminals received better treatment than their victims. Common sense took a beating when you couldn’t defend yourself from a burglar in your own home and the burglar could sue you for assault.

    Common Sense finally gave up the will to live, after a woman failed to realize that a steaming cup of coffee was hot. She spilled a little in her lap, and was promptly awarded a huge settlement.
    Common Sense was preceded in death, by his parents, Truth and Trust, his wife, Discretion, his daughter, Responsibility, his son, Reason.
    He is survived by his 4 stepbrothers; I Know My Rights, I Want It Now, Someone Else Is To Blame, I’m A Victim.

    Not many attended his funeral because so few realized he was gone.

  17. Obituary printed in the London Times reads as follows:

    Today we mourn the passing of a beloved old friend, ‘Common Sense’, who has been with us for many years. No one knows for sure how old he was since his birth records were long ago lost in bureaucratic red tape. He will be remembered as having cultivated such valuable lessons as:

    Knowing when to come in out of the rain; why the early bird gets the worm; Life isn’t always fair; and maybe it was my fault. Common Sense lived by simple, sound financial policies (don’t spend more than you can earn) and reliable strategies (adults, not children, are in charge).

    His health began to deteriorate rapidly when well-intentioned but overbearing regulations were set in place. Reports of a 6-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition.

    Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children. It declined even further when schools were required to get parental consent to administer sun lotion or an Aspirin to a student; but could not inform parents when a student became pregnant and wanted to have an abortion.

    Common Sense lost the will to live as the churches became businesses; and criminals received better treatment than their victims. Common sense took a beating when you couldn’t defend yourself from a burglar in your own home and the burglar could sue you for assault.

    Common Sense finally gave up the will to live, after a woman failed to realize that a steaming cup of coffee was hot. She spilled a little in her lap, and was promptly awarded a huge settlement.
    Common Sense was preceded in death, by his parents, Truth and Trust, his wife, Discretion, his daughter, Responsibility, his son, Reason.
    He is survived by his 4 stepbrothers; I Know My Rights, I Want It Now, Someone Else Is To Blame, I’m A Victim.

    Not many attended his funeral because so few realized he was gone.

  18. PJ did you get Obama’s talking pionts ?

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