Kmarion wrote:
Joe isn't actually in the tax increase bracket.
Joe MIGHT be in the tax increase bracket in Obama's proposal.
Obama's going to increase taxes on businesses, and I don't believe the offsetting tax credit he's talking about is necessarily going to offset the increase. So if Joe the plumber buys a business - the tax question in reality involves what TYPE of business he purchases. For instance, if he's buying a corporation, Obama's talking about increasing tax for corporations. If he's buying a different form of business, like one that reports the income on Joe's personal return instead of a seperate corporate return, the answer depends on how profitable the business is, because then it's direct income increase to Joe instead of having the income retained within the corporate entity.
But if Joe does buy a business that requires it to be taxed seperately at the state level, then he could be increasing the tax recognized by Joe's income stream because Ohio takes a cut. However, in any case, buying a business in most formats is termed as an investment, and if Joe was to sell his business, then he's going to be hit by Obama's capital gains tax increase, since Obama wants to repeal the 15% tax rate.
So in other words, the entire issue has been blurred by the candidates. Because it involves the type of business, tax planning for Ohio state taxes, etc etc etc. It's not a simple as they are presenting it.
The candidates continue to spar over tax breaks to individuals, but aren't focusing enough between the differences on the corporate tax differences in their platforms. Ultimately, Obama's plan would provide larger refunds to all but the upper echelon of individual taxpayers, while McCain would provide refunds to all, but not as much. But elimination of the capital tax cut we currently have would impact buy-sell conditions, what type of entity to form, most of which are types that would prevent small businesses to grow as fast as they could.
Secondly, increasing taxes on corporations will encourage companies to move overseas. A corresponding offset credit could be applied as Obama says, but then my question is - why is he banging the "we are going to charge more tax to corporations" drum if he's going to give it back? The answer? He's going to raise taxes in this area, but doesn't talk about it.
The differences between Obama and McCain in this regard is Obama wants the economic growth to be organic - which will limit the growth. McCain wants to subsidize it by providing the breaks - but this doesn't mean people won't pocket the gains instead of reinvesting it in their business.
Last night, Obama mentioned he favors "PayGo" - which means that when a tax cut is proposed, and corresponding tax increase is required. This isn't new. It's now law. So when I watch all of these proposals for tax cuts, it depends on the budget proposed. If you provide a $400B tax cut to individuals, there has to be a $400B tax increase somewhere. Yet when questioned about this, the candidates discuss cutting programs instead. The whole debate last night was in a gray area in this regard.
I'm ready for the election to be over. I've sickened on how much these issues are dumbed down so everyone can understand them.