How likely is it that "Joe" the "plumber" would make $250k+?

[ColbertWatcher]

Talk to me like I'm a 6-year-old and explain why it is (or isn't) likely that "Joe" the "plumber" could make $250k+ in his first eight years in business?


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SOME DETAILS

Link to the Obama-"Joe" the "plumber" video (http://www.youtube.com/watch?v=vFC9jv9jfoA)

In the video Obama says "Joe's" taxes would go from 36% to 39%.

36% of $250,000 is $90,000, 39% of $250,000 is $97,500 with a difference of $7,500.

The business "Joe" is interested in buying (the one he's been working at) is http://toledoblade.com/apps/pbcs.dll/article?AID=/20081016/NEWS09/810160418">A.W. Newell Corp..

http://www.manta.com/mb_45_B82C705K_36/plumbing_contractors/ohio">Manta lists "2,062 company profiles for Plumbing Contractors Companies in Ohio."

According to the Bureau of Labor Statistics, a plumber/pipefitter/steamfitter can make between $11.75 and $25.73.

Prospects for employment is good and employment will be on average for a plumber/pipefitter/steamfitter,

Employment change. Employment of pipelayers, plumbers, pipefitters, and steamfitters is expected to grow 10 percent between 2006 and 2016, http://www.bls.gov/oco/oco20016.htm">about as fast as the average for all occupations. Demand for plumbers will stem from new construction and building renovation. Bath remodeling, in particular, is expected to continue to grow and create more jobs for plumbers. In addition, repair and maintenance of existing residential systems will keep plumbers employed. Demand for pipefitters and steamfitters will be driven by maintenance and construction of places such as powerplants, water and wastewater treatment plants, office buildings, and factories, with extensive pipe systems. Growth of pipelayer jobs will stem from the building of new water and sewer lines and pipelines to new oil and gas fields. Demand for sprinklerfitters will increase because of changes to State and local rules for fire protection in homes and businesses.

Job prospects. Job opportunities are expected to be http://www.bls.gov/oco/oco20016.htm">very good, as demand for skilled pipelayers, plumbers, pipefitters, and steamfitters is expected to outpace the supply of workers well trained in this craft in some areas. Some employers report difficulty finding workers with the right qualifications. In addition, many people currently working in these trades are expected to retire over the next 10 years, which will create additional job openings. Workers with welding experience should have especially good opportunities.

Traditionally, many organizations with extensive pipe systems have employed their own plumbers or pipefitters to maintain equipment and keep systems running smoothly. But, to reduce labor costs, many of these firms no longer employ full-time, in-house plumbers or pipefitters. Instead, when they need a plumber, they rely on workers provided under service contracts by plumbing and pipefitting contractors.

Construction projects generally provide only temporary employment. When a project ends, some pipelayers, plumbers, pipefitters, and steamfitters may be unemployed until they can begin work on a new project, although most companies are trying to limit these periods of unemployment to retain workers. In addition, the jobs of pipelayers, plumbers, pipefitters, and steamfitters are generally less sensitive to changes in economic conditions than jobs in other construction trades. Even when construction activity declines, maintenance, rehabilitation, and replacement of existing piping systems, as well as the increasing installation of fire sprinkler systems, provide many jobs for pipelayers, plumbers, pipefitters, and steamfitters.

[Donnachaidh]

1. his business must be in a republican neighborhood

And we all know repukes are full of shit :evilgrin:

[ColbertWatcher]

5. LOL! Good one! n/t

[Cerridwen]

2. *Taxable* income.

It would have to be *taxable* monies.

C & P from my other post:

Another thing that's almost always left out of these discussions about *earnings* and taxes is that wages are taxed one way; dividend income another; long term investments another; short term investments another; self-employed/small business income has some other hoops; etc. and so on.

I used to prepare -simple- taxes but I worked for a CPA who specialized in small businesses and their taxes so I saw and learned about those as well.

"Joe the plumber" would have received several tax breaks which may have kept him under the 250K threshold for quite some time. I've seen taxes where a single guy running a small business made close to 100K and still qualified for the earned income credit because of all of his business write-offs.

Those trucks he was talking about buying would have been depreciated; gas expenses written off; maintenance, truck payments and insurance as well; office furniture and office expenses, inventory, cost of goods, utilities, wages and health insurance payments, and so on - you get the idea. If good ol' Joe had a good CPA, he could make well over 250K and manage to write himself down and avoid the threshold. Hell, even the CPA expense and tax prep are write offs.

But, and this is frequently avoided, the way the tax law is written, ol' Joe and other small businesses (look up the IRS definition for small business sometime. I think it's 500 employees.) don't reap near the benefits and write offs as major corporations and multi-nationals. "Small business" is just another repub and r/w canard. They do little to nothing to benefit what you and I think of as small business (mom and pop shops) and frequently write tax law that benefits major business and leaves out the plumber Joes of the world.

Do NOT take any of this as tax advice. I am far from an expert and I'm a bit rusty. If you have tax questions, call the IRS and/or your CPA.

BTW, now is a good time to start getting your stuff together for taxes <<<<<<<<---- public service announcement. LOL

:hi:



eta: can't believe I forgot this part - stock sales and purchases are another calculation and stock losses are a write off. Again, this is not set in stone (or the IRS tax code) and tax laws change almost every year.

edit for ColbertWatcher: link to my post in this thread as requested.

[ColbertWatcher]

8. Would you mind adding the link to the other thread, please? n/t

[Cerridwen]

10. You betcha!

;)

:rofl:

[ColbertWatcher]

16. Okay, I fell for it. Will you please post the link? n/t

[Cerridwen]

25. I edited my post to include the links. Sorry, I should have said that's

what I did. It wasn't intentional - but it is funny. I'm laughing at myself because I didn't say as much. :rofl:



Here're the links I edited into my post #2. Sorry, I should have directed you up to my post #2.

link to my post in this thread as requested.

edit to add: the you betcha, followed by the wink was my smiley palin impersonation. You thought I was...I'm so, so, sorry. I probably shouldn't be posting while sober.

[ColbertWatcher]

36. Thank you! n/t

[Stand and Fight]

3. Watching this thread as I've been wondering how myself...

I honestly don't think this is possible for a plumber. I'm a senior web developer/designer and I'd hate to think a plumber makes more than I do... Way more for that matter.

[bbinacan]

4. I used to be an Investment Consultant

and had a plumber as a client. He started out as a hired hand and later started his own plumbing business. He employed about 30 people and he made about 400k/year. I suppose it can happen.

edit for spelling

[ColbertWatcher]

6. $400k the first year!? The company "Joe" wants to buy is basically a 2-man operation. n/t

[bbinacan]

11. No not in the first year.

It took him a number of years to build the business up. About 8 years if I remember correctly.

[ColbertWatcher]

13. Do you remember what he made his first year? n/t

[bbinacan]

18. No I don't.

He didn't become my client until his financial situation required my services.

[Cerridwen]

7. Do you know how much of his 400K he paid taxes on? n/t

[bbinacan]

15. I don't remember.

I do remember that I worked with his CPA on a plan and we stressed tax free and tax deferred strategies.

[Cerridwen]

24. Thanks.

It's another area people forget about. Even if someone makes, as in this example, $400K, that doesn't mean they are paying taxes on the full $400K. It starts at line 43 on form 1040 and then is followed by tax credits then taxes owed and bladdah, bladdah. Then there's the adjusted gross...your eyes glazing yet? I'll quit now. :D

Anyway, I bet you know this but perhaps others reading this hadn't thought about it yet.

:hi:

[librechik]

19. Joe owns a $16M dollar home in AZ, and made $40,000 in 2006

Show me how to do that without outside "help"

That's a bit unusual for plumbers, don't you think?

Things don't add up about this subject.

Very interesting!

[bbinacan]

20. What home are you talking about? n/t

[ColbertWatcher]

26. You must have missed the late-night discovery by LiberalHeart ...

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4247159&mesg_id=4247159

[librechik]

27. check this out--

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=132&topic_id=7484632&mesg_id=7484632

interesting, isn't it?

[bbinacan]

29. It's a freakin' apt. complex n/t

[Blue Diadem]

43. Uh...that address in AZ was an Apt./condo complex. n/t

[depakid]

9. My guess is that he's confusing gross receipts with taxable income

He doesn't seem very knowledgeable about tax matters, does he....

[Cerridwen]

12. Not if he has a tax lien on his property.

I know most people think the various tax agencies are devils incarnate, but it is possible to work with them to make payment plans to pay any taxes owed if you don't have the money. Not always and there are horror stories. Most of us wouldn't have those kinds of stories.

[LiberalHeart]

45. Reports saying "property" are wrong. It's income tax for state of Ohio.

[Cerridwen]

46. Okay, thanks. Still same answer though. State revenue offices

will also work with a taxpayer on a payment plan. With all the conditions and exceptions I mentioned in my previous post.

He's an idiot if he didn't make arrangements to pay. They become especially brutal if you don't cooperate; those are usually (not always) the back stories of the horror stories we've read about.

[Lydia Leftcoast]

14. Coupla points

1. Joe would pay the higher tax bracket ONLY on the excess above $250,000. That is, suppose he earned $300,000 in personal (not business income). He would pay 36% on the $250,000 and 39% on the next $50,000.

2. If a business grosses $250,000, that's not its taxable income. It can subtract all its legitimate business expenses, and it is taxed ONLY on what is left over. If it has $200,000 in expenses (rent or mortgage payments on buildings, equipment, vehicles, employee wages and benefits, insurance, utilities, etc.), then it pays taxes only on $50,000.

[ColbertWatcher]

21. And, since the $50k is less than $250k, he would be taxed 36%? n/t

[UTUSN]

17. He told Diane SAWYER he makes "Nowhere close" to that. My question is,

how was he supposedly "planning to buy" the employer's company, now especially with the added information that 1) he's in debt over taxes and 2) he's not a licensed plumber?!1

[deutsey]

47. I've seen this mentality with conservative friends of mine

One in particular is stuck in a shitty job like me. Also like me, he's from a working class background. But he's absolutely certain he's going to be wealthy one day. So he doesn't want to have all his phantom wealth taxed and keeps voting for all these people who help keep him in his shitty job.

[Traveling_Home]

22. CNN?? 70 percent of small business owners with 10+ employees make $250,000+

[ColbertWatcher]

23. Link, please! n/t

[Cerridwen]

28. Since they're a business, they'll be filing an 1120S or 1120 so

probably won't have much to do with 1040 i.n.d.i.v.i.d.u.a.l. filers and the $250K threshold.

Gross receipts or net? Before or after wages?

CNN has become such a lame joke.

[noiretextatique]

30. it's very unlikely that his taxable income would be 250K

but it's possible he (well, probably not him) could gross 250k.

[ColbertWatcher]

31. Describe as simply as you can the difference between taxable and non-taxable income.

Please.

[noiretextatique]

32. well...gross income is more accurate than non-taxable income

on schedule c, you report gross business income. expenses, e.g., salaries, rents, depreciation on equipiment, etc., are deducted from gross income to determine net income/loss, which you report on form 1040, just as you would wages from a job. from net income/loss you can deduct adjustments and itemized expenses to determine taxable income. if you have a loss from business income, and no other taxable income, you don't have any taxable income. in the first few years of running a business, it's not uncommon to have a loss, particularly if you've had to purchase capital assets, e.g., equipment, trucks, etc. and it takes time to develop a customer base too.

in other words: joe the plumber is a dumbass.

[ColbertWatcher]

33. I would call "Joe" the "plumber" another victim of GOP lies. n/t

[noiretextatique]

34. a willing victim

he makes 40k a year right now.
he would benefit from obama's tax plan.
he will not benefit from mccain's tax plan
he's a dumbass.

[ColbertWatcher]

35. Yes. He would not benefit from the tax plan he supports. Poor, confused "Joe." n/t

[gopbuster]

39. The way I figure it at a 10% profit margin they need to do 2.5 mil revenue

in order for the company itself to clear $250,000 in profit. He would have a lot of growing to do to get to that point.

[leftofthedial]

37. the whole thing is BS

he isn't a licensed plumber, has no shot at buying the business he works for, makes $40K a year and doesn't even pay his taxes on that...

[ColbertWatcher]

38. You know that. I know that. Everyone on DU knows that.

But, do you think the people who need to know this do?

I'm hoping one of DU's debunk the myth of "Joe The Plumber" threads starts getting more traction over the "Praise His Majesty Joesephus, Plummier" threads by all the talk-radio-information voters.

I doubt it, but I can still hope, can't I?

[leftofthedial]

49. one can always hope.

traction, on the other hand, obeys the laws of gravity and of de-evolution.

[gopbuster]

40. The way I figure it at a 10% profit margin they need to do 2.5 mil revenue

The way I figure it at a 10% profit margin they need to do 2.5 mil revenue
in order for the company itself to clear $250,000 in profit.

Also at 2 men x $70 per hour x 40 hours per week x 52 weeks = $291,200 REVENUE < deductions and expenses> = taxed profit


He would have a lot of growing to do to get to that point.

[ColbertWatcher]

41. Good point. Thank you. n/t

[Hugabear]

42. Better question: How does an UNLICENSED plumber make that much?

Unless he's working for the Mob...

[mickeymusic]

44. $250k Joe the Plumber

I don't think Joe actually earned $250k, but from what I've heard in the media today his family has some money. So Joe probably earned some of the money in his 7 years as a plumber and got the rest from his family. Plumbers do make good money.

[ColbertWatcher]

52. Welcome to DU. I think he just hung his hat on that number based on what he heard.

He must have heard that number somewhere and just assumed it meant "small business" or confused gross income with taxable, etc.

As far as having the money to buy into it, maybe his family is rich, maybe he won the lotto, maybe the previous owner is letting him "buy shares".

Who knows what he was thinking.

The life of a news cycle used to be 9 days, he's got about a week left to either clarify what he meant or learn the way things really are.

[soothsayer]

48. He doesn't earn that. He wants to buy a biz that makes that. He's a dope.

How's he going to even get credit? Good luck, Joe! You don't even understand the first thing about taxes. You're unlicensed. How are you going to run a biz?

[Regret My New Name]

50. I don't really get the whole buy a business thing....

Don't most small businesses owners start a business?

I've never started a business of my own, but I've been around ones being started. Isn't the personal income usually separate from the personal income? So like even if the business itself made $250,000 a year, how much of that would be taxable?

What funny is that the people whom I was around when they were starting their small business are republicans and they know this... They know it better than me because I was just observing, and picked up on a few things... Yet they still are buying into this whole thing... I don't get it all. I'm fairly sure I'm too off base on this, am I?

[ColbertWatcher]

51. I think the technical definition of "small business" is dependent on how many employees ...

... there are working there, not on who started the business.

According to Wikip*dia a small business in the US is any business with fewer than 100 employees (http://en.wikipedia.org/wiki/Small_business).

Most anyone can learn to run a business and there are even groups who can help start a business, like SCORE (the Service Corps of Retired Executives http://www.score.org/) and even the Small Business Administration offers help as well as loans (http://www.sba.gov/).

In addition, there are other organizations what help minorities and women start and operate businesses (http://money.cnn.com/2007/03/26/magazines/fsb/womenetc.links.fsb/index.htm).

So, it's not just limited to "republicans". As far as why they're turning a blind eye to "Joe" the "plumber's" unique problems, it may just be his coded language they're responding to.

They may not agree with his business plan, but they will not publicly betray the other ideas he's spouting.

[Regret My New Name]

56. Really? Fewer than 100 is considered small businesses?

I didn't know that.

Oh yeah, I agree that anyone can start a business. In fact I've seen numerous people around me start their own businesses. Most of them didn't have any clue as to how it works or what they had to do, so they hired various people to assist them with that. I really don't doubt that this guy could start a small plumbing business at some point(not so sure about the tax issues affecting him though even if he did...) I was just confused about the buying part since I've never heard a non-business like person buying a business as their first venture. Of course that is just from my personal limited experiences on this planet.

[PVnRT]

53. Not necessarily

People buy struggling restaurants, shops and service companies that are small business all the time. I have no idea if that happens more than being started, though.

[Regret My New Name]

55. Regular Joes though?

I'm I can see it happening, but it just seems like it would be far less likely and harder to do. I mean, if they are a regular Joe then they probably don't have a whole lot of spare cash to go around (unless they managed to come across some due to inheritance or something)... Would a bank be willing to loan out money to someone who is going to put towards a troubled/struggling business if they have no business track record?

[Regret My New Name]

54. oops...

That was supposed to say business income separate from blah blah blah... Editing time expired. I should proof read more.

[docscott]

57. Did I hear Obama right

In the You Tube video did I hear Obama right when he said when your Revenue goes from $250,000 up your tax will go from 36% to 39%. Did he mean when your Income goes up or does his plan tax your revenue.