help with question-hardware store owner on Ed Show

[handmade34]

this guy is complaining that if the tax cuts are not extended... he will have to pay the extra tax and then not have money for hiring and/or improvements... the taxes kick in after deductions, right? what am I not understanding? why is this guy whining?

[Warpy]

1. This guy is whining because Rush told him to whine, basically

Any profit that goes for capital improvements gets deducted from the net. Only the net is taxed.

This man is likely too stupid to do his own taxes, so he relies on dropouts on the radio to tell him how badly he's being treated.

[B Calm]

2. Truth be known, this bastard probably hasn't paid taxes in years!

[rucky]

3. He's whining because he doesn't understand it and you do.

[handmade34]

10. Ed needed to call him on it

[spanone]

4. did he thank Obama for the 30 billion is small business tax breaks just enacted?

his hardware store was where the thugs unveiled their 'plague on america'

[handmade34]

16. he complained about the small business breaks

just enacted... he seemed like a reasonably intelligent man, until he started complaining that new taxes wouldn't allow him to reinvest :crazy:

[jtuck004]

5. You are correct. The tax cuts are on income, which

comes after business expense. Which would make sense if he is raiding his company for money that should
rightfully be building his business. Then he has a point. It's just awful to have someone taking money
out of your pocket while you are trying to abscond with it from your business, even if the streets, police,
fire, teachers, soldiers, and other parts of our system were necessary for you to make the money in the first place.

His sales are probably down, so he is taking the same paycheck he was taking b4 the crisis, instead of making
adjustments to make sure his business survives. That is what he is complaining about. Essentially he is being
selfish. Because the business isn't replacing the income he is taking out, he would rather continue to take the
same amount and not pay his fair share of taxes while 30+ million of his neighbors are unemployed or underemployed.

[NoSheep]

9. Ding!

[Luminous Animal]

13. Not just after business deductions but after personal deductions, as well.

[handmade34]

15. the dems need to somehow

to get on the defense and make sure people understand how taxes work... this is nonsense that this guy, even on the Ed Show can talk this way without being corrected

[jtuck004]

19. These folks need to be challenged when they infer that it is a tax

on business receipts. It's on what they pull out for their own gain, not what is left in the business.

here's a list:

http://www.taxfoundation.org/news/show/26010.html

[handmade34]

20. thanks for the link n/t

[tulsakatz]

6. that's a typical republican argument......

I've seen several do it recently. They say that some small businesses file as individuals to get the tax breaks. Now, I will admit I don't know that much about tax laws but it seems to me that if a business files as a business (instead of filing as individual), they would get better tax breaks.

Plus, even if a small business files as an individual and that business qualifies as the top 2% richest in the country......to me, that's not a small business!

Not to mention that republicans have already voted against legislation that would give tax breaks to small businesses.....

[Curmudgeoness]

18. Businesses can be set up as one of several different entities,

like corporations, limited liability companies, or as individuals. There are many circumstances that determine which entity works best in your situation for taxes. No matter what the set up is, you only pay taxes on the net profit----sales less ALL expenses related to the business, including payroll and taxes involved.

I doubt this would be set up as an individual business, but even if it is, he would be able to take all business expenses before he got to taxable income.

Example: Your sales are $100 for the year. You paid $50 for the merchandise that you sold. Your income is now only $50. But you also have rent on building, utilities, pay for the cashier and stocker, legal and accounting expenses, your expenses for office supplies and cleaning supplies and light bulbs to keep the store lit. Lets say all your expenses to run your business is $40. Your taxable income is $10. And if this is your case, you are in good shape because a 10% margin is damned good.

[Dawson Leery]

7. This tool does as Rush, Sean, and Mark order him to do.

[gratuitous]

8. How much over a quarter mil a year is this guy making?

And does he really plan to improve his store and hire more people on the three cents on the dollar he's making over $250,000 a year that would be his additional tax burden? Something smells like fertilizer here.

[elleng]

11. Sounds like a pretty darned successful hardware store!

Not a tax expert here at all, but tax is on income OVER 250,000, adjusted gross income, gross income is reduced by adjustments and tax deductions.

[Luminous Animal]

12. The increase is assessed on taxable income... in other words... after deductions.

And if the guy's taxable income is currently $200,001... the 1st $200,000 would be taxed at the current rate and only the additional $1 would be taxed at the higher rate.

[Dawson Leery]

14. That is an extra 3 cents!!! How can you do this to him?

:sarcasm:

[county worker]

17. Just the opposite happens.

This guy most likely has a pass through corporation or business meaning that the tax on the profits goes to his personal income tax return.

So when the tax rate is high owners invest in their companies to avoid the tax, in other words they try to break even. Net Income is zero. One way to do this is to increase expenses like payroll.

When the tax rates go down they pay themselves more because the income pass to their personal income tax is taxed at a lower rate. The give themselves more by cutting expenses like payroll which give more net income.