Thinking about Joe the Plumber's actual claim

[Geoff R. Casavant]

Forget for a moment all the other crap that has come out about Joe the Plumber in the last 18 hours. Assume he's on the up and up, and he's actually a plumber, trying to buy a business that has $250K profit every year.

His claim is that under Obama's proposed tax plan, his taxes will be so high he won't be able to afford to hire anyone new. This just doesn't make sense. When an employer crunches numbers to determine whether it is economically feasible to hire someone new, the employer's sole concern is whether that employee will generate enough income to exceed the expenses associated with that employee (i.e., salary, employer's contributions to taxes, and benefits). All of that employee overhead is deductible by the employer, and only the remaining profit is taxed.

Here's the sticking point -- the amount of that employee overhead is more or less dependent on the employee's salary, not the employer's. It would cost Joe the same overhead to hire an employee with a $30K salary, regardless of whether Joe himself nets $100K, $250K, or $500K in a year.

What Joe would actually mean then, is, I would hire an employee if my profit on him was taxed only at 36%, but not if my profit was taxed at 39%. And that's not the result of Obama's tax policy, only the result of Joe's own greed.

[JuniperLea]

1. A company that would bring $250k in yearly PROFIT

Would cost millions.

[TheCoxwain]

2. yes ... the valuation of such companies is usually 10 times EBIDTA

so you are looking at around 3 million

[rateyes]

4. And, that company consists of the unlicensed owner and Joe.

That's it. Joe is a damned liar.

[sandnsea]

3. If Joe wouldn't take $40,000 of his $250,000

to pay someone to gross him another $100,000 - then Joe's an idiot. Which we already knew.

[mrcheerful]

5. The more I find out about the great JTP the more I'm thinking

ahhhhhhhh shit another I'm going to be rich someday because I'm such a wonderful human being and I deserve it with tax breaks for me types. Not that they ever get past the working for others just to get through today or their nightly escapes from the job at their favorite watering hole, but hey I dream big. Man, they make me wanna :puke: every time they open the cess pools they pour beer into. Nit wits sheesh.