"Most small businesses are taxed at the individual rate." <---- Big Fucking Lie

[Stinky The Clown]

The statement itself, technically, is very likely true.

Here's the lie:

The vast, overwhelming, massive percentage of small businesses earn far less than that. The statement is true of the little, onesies twosies threesies companies where the owner is a sole proprietor or partnership. Some LLCs and S-Corps are also in the group. They pay taxes at the individual rate

Most of these people will be lucky to earn the maximum $250K in three years, let alone one.

But the right wing rhetoric lies by conflating these little people with anyone who has a business that **earns** for its **sole** owner more than $250K. That is not how much the business takes in. The business could take in millions. That doesn't matter. It is how much profit goes to the sole owner that matters. People earning that much in their small businesses either set themselves up to mitigate their taxes or they are as stupid as a teabagger.

The media goes on and on. They make it seems as if they're refuting this, but NO ONE tells the truth of this Big Fucking Lie.

[russspeakeasy]

1. I knew that, but I didn't know how to say it. Thanks.

[Schema Thing]

2. It's bullshit. If you make 250k AGI on your 1040 after having done a Schedule C

you sure as hell don't deserve any special tax breaks for having done so; you've already accessed many tax deductions and credits that the average wage earner does not get.


So if at that point you want to pay less taxes, fine, give yourself an income of 100K (last I heard that was pretty good) and take the remaining 150K to create a job or two and expand your business. Easy peasy, you just sheltered 150K and grew your business.

now shut up and quite whining.

[SoutherDem]

5. When this "hurt small business crap" came up a couple of years ago I heard a tax attorney put it

this way. I will assume since this is his business he knew what he was talking about.
He said there were very few "real" small businesses who would qualify for the tax increase. He went further to say for the few who would owe more could simply invest the profit over $250K into the business and get their AGI below $250K and grow the business in the process. Then he stepped out on a limb. For those who make so much that they would be over $250K, assuming the had a real business plan, should not be allowed to file as an individual but file as a corporation because they are not "real" small business and are relying on a loophole to in essence cheat the system. He did say there were a very small percent who do not have good business plans and are not taking advantage of the tax system which was designed to help them as a "real" small business.

He explained the "business plan" would be knowing where you stand from a tax/profit position by November to invest excess profit before December 31.

So basically, the few who would be effected either need a good tax attorney or accountant, could benefit from the tax by growing their business or are cheating the system.

For those who know more about the tax system than I, does this sound correct?

[Schema Thing]

6. it sounds correct. I don't know that I agree that they shouldn't be able to file as individuals

I just think they shouldn't be allowed to act as if they are some special class of person who's LARGE 250K income should somehow be taxed at a lower rate than other people's 250K income. As I pointed out, they've already gotten pretty favorable treatment on their schedule C.


They damn sure should not be whining or acting as if they are some special form of job creators. If you're a job creator, prove it. Create a job. You can write the entire amount you pay someone else off of your business income.

[Stinky The Clown]

8. That is essentially what I said in the OP.

[SoutherDem]

11. Yes you did, I was simply adding that this has been around for sometime

And a tax attorney stating the same.

[HiPointDem]

3. kr

[kestrel91316]

4. My business is a sole proprietorship, so any income I derive from it (aka profits)

is taxed at normal individual rates. If it were a corporation, I would draw a salary which would be taxed as normal individual earned income, and any corporate profits at year's end would also be taxed, but I don't know much about that.

[Stinky The Clown]

7. Correct. You're probably one of the millions of similarly taxed small businesses.

Do you make anything near or above a quarter million a year in profit (taxable income) from your business?

If your answer is "No" then you are one of the millions of small business owners about whom the right wingers are telling big, fat lies.

[kestrel91316]

13. Nobody on DU would believe me if I told how very little I take home

from my business. I am surviving in this economy - barely.

[JBoy]

9. Yup. By definition, a business owner taking income out of his business

is NOT using that money for job creation.

That's the whole problem with low tax rates for the wealthy. There's no incentive to leave it in the business to grow it.

[SoutherDem]

12. Amen brother Ben

Lowering the tax rates encourages not reinvesting.

[FarLeftFist]

10. The average small business owner makes about $50,000/yr

http://smallbusiness.chron.com/average-income-small-business-owners-5189.html