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Small Business? They’re the engine of the economy
Posted by: McQ on Saturday, October 18, 2008

Barack Obama mockingly asked, the other day, if anyone knew any plumbers making 250K. Well, yes, actually - those that own small businesses in which plumbing is the focus. Asking a question like that again shows you how unfamiliar Barack Obama (and apparently his advisers) is with the economy and the world the rest of us live in.

Patterico, via Pundit Review, lays it out for all of those who seemingly don't understand what small businesses generate in today's economy in terms of revenue. This is how the government he would run defines "small business":
Here are examples from the SBA’s Table of Small Business Size Standards setting forth the maximum average annual receipts by industry that a business can have and still be classified as a small business:

Crop production of all types — $750,000
Animal production except for cattle & chicken/eggs — $750,000
Cattle feedlots — $2.5M
Chicken/egg production — $12.5M
Forestry & logging — $7M
Fishing — $4M
Irrigation, sewage, water supplies — $7M
Housing construction — $33.5M
Heavy and civil engineering construction — $33.5M
Dredging and cleanup — $20M
Concrete, framing, and other housing contractors — $14M
Car dealers — $23-29M
RV, motorcycle, & boat dealers — $7M
Furniture, hardware, clothing & sporting good stores — $7M
Electronic stores — $9M
Supermarkets, gas stations & department stores — $27M
Pharmacies — $7M

In addition, most of the industries in the Table — such as manufacturers of food, beverages, apparel, print, oil/gas, plastics, plumbing, machinery, computers, electronics, electrical, transportation, and furniture — are considered small businesses based on their total number of employees instead of average annual receipts. In those industries, the cut-off between small and large businesses ranges from 500-1,000 employees per business/industry.

It’s difficult for me to imagine a business that has 50 or more employees (let alone 500-1,000) that has receipts of less than $250,000 per year. And, given the SBA definitions of “small business,” it seems likely that many small businesses in a wide range of industries have receipts of more than $250,000 per year.

If so, it is appalling that Obama would imply that, if he is President, a small percentage of businesses exceed the $250,000 per year cut-off for increased taxation under his tax plan.
And that's precisely what he claims. In fact, he doesn't "imply" that, he claims that "98%" of them would be under $250,000. That's just an appallingly ignorant claim.

However, what it tells you is, regardless of its economic impact, and thereby its impact on job creation and growth, he intends to fund his utopia with this "5% of the rich" nonsense he's been blabbing about since this race began.

Take a look at that list. Identify the segment in which your job lies (and btw, you can add a ton of independent medical practices and law practices to that list who file under Subchapter S). If Barack Obama carries out his "5% tax plan" you might be kissing it goodbye.
 
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I still can’t over the implications of that quote about how many plumbers you know making 250k.

I’ll say it again- that6 quote translates into "you make $250K? Sc*ew you. You’re the problem and we have to deal with you"

This socialist is basically equating a guy making 250K with a guy with Kerry or Kennedy-like money. Or Obama-like money.

And wants to punish him for it. (Sorry, not "punish" but "spread the wealth" around)

Socialism is an inherently evil system, mostly because it stifles humanity, denies dreams, crushes spirit.

And telling us that success is ok up to $250K - but go over that and you’re the problem - is an just horrible.

This is the first time in my life that I’ve heard someone actually put a price cap on acheiving the American dream.

 
Written By: shark
URL: http://
Not trolling with this one, but I keep reading how a business will take in over 250, but there’s one issue no one’s seemed to address yet.
it seems likely that many small businesses in a wide range of industries have receipts of more than $250,000 per year.
Aren’t taxes on profit? Sure I’ll agree most small business take in 250, but wouldn’t it only be the owners who can show a $250K/year profit who would see that tax increase?

I miss something?
 
Written By: Ryan
URL: http://
I miss something?
Look at the high range of revenue for those considered small business. Do you suppose a car dealership that makes 15 million might have a profit of over 250k? And if they want to expand their business to one that makes 18 million, do you think they may think twice about the cost of putting those extra salespersons on the payroll or committing to the extra inventory necessary to do that?

And that decision not to add people (jobs) or inventory (which then impacts the car manufacturers, and the jobs there) because of higher taxes won’t have an economic effect?

 
Written By: McQ
URL: http://www.QandO.net
Well, um... maybe he’s only going to tax the, um, after tax income.
 
Written By: Synova
URL: http://synova.blogspot.com
Small Business? They’re the engine of the economy
Wait a minute. I thought college professors, journalists, community organizers, and philanthropic heirs were the engine of the economy?
 
Written By: Augustus
URL: http://
What the country needs is a seminar on "The Uses of the Rich," which would explain that, like them or not, the rich can eat exactly as much food as they can consume and sleep in one bed at a time, and that all that "excess money" is spent on investing in the economy, creating jobs, paying other people for stuff, and spending money on things.

In short, the rich are a net benefit to everyone, and they spend and invest their money much more efficiently than the government does.

The right tax plan would tax the rich very little, if at all, because that would induce more wealthy people to live in the U.S., invest and spend their money here, and that would make the private economy grow at a much more robust rate.

That, for instance, an idiot savant billionaire like Warren Buffet wants small businesses to pay more taxes is irrelevant. He has forgotten about the struggle to succeed, and the struggle of what to do with one’s success. He’s living in the abstract fantasyland of the billionaire who can afford to tell people how they should live large on the taxes of the small business engine.
 
Written By: Martin McPhillips
URL: http://newpaltzjournal.com
This display of invincible ignorance just stuns me. Taxes are levied on profits, not gross revenues. I supplied some links in a previous post, with relevant excerpts. Obviously lack of reading comprehension is not a monopoly of the left.

"Taxable income of an incorporated business, also called net income before taxes, consists of total revenues less cost of goods sold, selling and administrative expenses, interest, and extraordinary items."
http://www.taxalmanac.org/index.php/Sec._63._Taxable_income_defined

More at;
http://www.irs.gov/businesses/small/article/0,,id=109807,00.html


"Do you suppose a car dealership that makes 15 million might have a profit of over 250k?"

They may or may not make a profit. Do you suppose that a brokerage that makes billions might have a profit of over $250k? But that is not what was stated.

"And if they want to expand their business to one that makes 18 million, do you think they may think twice about the cost of putting those extra salespersons on the payroll or committing to the extra inventory necessary to do that?"

Payroll costs are an expensewhich is deducted from gross receipts before taxable income is determined.


I welcome any cites which will contradict mine.
 
Written By: timactual
URL: http://
P.S.:

In other words, no one "spreads the wealth around" more effectively and more efficiently and for the good of the economy (and no one has a greater financial interest in the success of the economy) than the people who own the wealth.

The Marxist class warfare sentiments of the Obama campaign are a repulsive miscontruction of how successful economies operate.
 
Written By: Martin McPhillips
URL: http://newpaltzjournal.com
"What the country needs is a seminar on "The Uses of the Rich,"........ all that "excess money" is spent on investing in the economy, creating jobs......and they spend and invest their money much more efficiently than the government does....."


Finally. Someone clearly makes the point.
 
Written By: timactual
URL: http://
P.P.S.:

People who make $250 grand or more are the people most likely to be able to afford homes in the slow housing market, the people most likely to be able to cointinue employing home improvement and other small business contractors, the people most likely to go out to dinner and spend money that employs managers, cooks, waiters, busboys, etc., the people most likely to purchase durable goods.

Why the f**k would Barack Obama want to put higher taxes on them unless he wanted to essentially deflate a market economy in favor of a state income redistribution economy?

It’s a downward spiral to an aggrandized welfare state, where the idiots turned out by the public schools go right onto the government tit because the economy is in a permanently depressed state because the government takes so much money out of it.
 
Written By: Martin McPhillips
URL: http://newpaltzjournal.com
"Payroll costs are an expense which is deducted from gross receipts before taxable income is determined."
If the tax on the remaining net income is going to be higher, the owner(s) are naturally going to take home less, with nothing else changing. But they probably aren’t going to be okay with that unless the difference is trivial. The owner isn’t going to happily eat the tax, in other words. So what do they do? They raise prices, as much as possible. That might lead to less business depending on a lot of other variables. That, in turn, could easily lead to cutting payroll - either by cutting staff or cutting salaries or freezing raises or other things. It certainly might lead to less hiring. The bottom line is that taxes on business are passed on to the consumer most of the time and the subsequent demand will determine the effect on the business. There is definitely interplay between all the variables in the equation. But the tax is a non-value added drain on direct efforts of the business and the people buying it’s goods and services. To imply in any way that increasing business taxes will not affect employment or the costs of products and services - that it will be completely born by the owner - is simply wrong.
 
Written By: Grimshaw
URL: http://
Do you suppose a car dealership that makes 15 million might have a profit of over 250k?
Yup, I’d sure hope so. But I can’t reconcile that with your statement about receipts. I guess I’m just being picky.
it seems likely that many small businesses in a wide range of industries have receipts of more than $250,000 per year.
Al, that’s funny. Personally I can’t stand the socialist, but if somone’s going to argue against it you can’t just argue about gross income and leave a wide opening where The One’s followers can smack you around with the difference between gross and net.
 
Written By: Ryan
URL: http://
Yup, I’d sure hope so. But I can’t reconcile that with your statement about receipts. I guess I’m just being picky.
I guess I’ll be picky then - I didn’t say "receipts", Paterico did. In my comment to you I specifically said "profit"

The fact remains that most small businesses of any size on that list are likely to have profits over 250K.

So to the point - do you think increasing taxes on them is a "pro growth and job creating" strategy in a down economic climate?
 
Written By: McQ
URL: http://www.QandO.net
guess I’ll be picky then - I didn’t say "receipts", Paterico did.
Ahhhh, My Bad. Apologies.
So to the point - do you think increasing taxes on them is a "pro growth and job creating" strategy in a down economic climate?
Absolutly not. I agree completly this is a horrible idea. I meant to take issue with the whole profit / gross differentiation, an seem to have done a bang up job flubbing that.
 
Written By: Ryan
URL: http://
I think we should count our blessings. A couple of months ago over at my blog (or was it at OTB?) there was a heated discussion over what constituted “the rich”. Quite a few commenters maintained that anybody in the top quintile, i.e. making over $97,000 per year, was rich.

The number being discussed is a little better but I think that even better would be anybody making more than three standard deviations over the median was rich. That’s about $350,000.

 
Written By: Dave Schuler
URL: http://www.theglitteringeye.com
Quite a few commenters maintained that anybody in the top quintile, i.e. making over $97,000 per year, was rich.
It really doesn’t matter, Dave - it’s a totally arbitrary number which, of course, can be changed at the drop of a hat depending on "economic conditions". Clinton already set that precedent.
 
Written By: McQ
URL: http://www.QandO.net
"To imply in any way that increasing business taxes will not affect employment or the costs of products and services - that it will be completely born by the owner - is simply wrong."

And to imply that business taxes are the same as personal taxes is likewise wrong.



"there was a heated discussion over what constituted “the rich”."

Rich has a pretty subjective definition. Even dictionaries are no help there. You could even use a third-world definition of rich, where everybody with indoor plumbing is rich.

"1. Possessing great material wealth: "Now that he was rich he was not thought ignorant any more, but simply eccentric" Mavis Gallant.
2. Having great worth or value: a rich harvest of grain.
3. Magnificent; sumptuous:...."
http://www.thefreedictionary.com/rich
 
Written By: timactual
URL: http://
The Obama kids have no ethical foundation. "Just win, baby."
They never thought the thing through, what will happen to them when everyone does the same.
The Democratic Party of the 2000s is an ugly spectacle. Wait until the evolutionary spiral kicks in. The mob cheating mentality and thug behavior always escalates.
 
Written By: mitt
URL: http://
My employer just nixed a plan to add about 18 new positions that would have had annual salaries of about $1.4 million. One reason: The anticipation of higher taxes.

 
Written By: Diffus
URL: http://
"And to imply that business taxes are the same as personal taxes is likewise wrong."
I don’t recall ever implying this, but business taxes ARE personal taxes on the OWNERS of the business - either literally or indirectly. This is very direct if you are a sole prop or an S-corp and indirect (but having the same effect) if you are a corp. If you’re just being pedantic then fine, have it your way. What really matters is the net effect.

 
Written By: Grimshaw
URL: http://
Consumer spending drives this economy. Obama’s position is that we should put money in the hands of consumers.

Wingnuts don’t understand this simple premise. Weird.
 
Written By: mkultra
URL: http://
Obama’s position is that we should put money in the hands of consumers.
I almost tried to explain to you such things as "Obama’s tax-plan will increase my taxes" and "Where do consumers get their money", but then I realized that they would go right over your head...
Wingnuts don’t understand this simple premise. Weird.
What I find amazing is the idea that the way you get the money to the consumer is to take it away before they ever see it...
 
Written By: Scott Jacobs
URL: http://
"Consumer spending drives this economy. Obama’s position is that we should put money in the hands of consumers.

Wingnuts don’t understand this simple premise. Weird."
You’re worse than a child. A child could be taught that this "money" has to come from somewhere, and that stealing it is like trying to kick-start perpetual motion.

You’ve got a "simple premise", alright.
 
Written By: Billy Beck
URL: http://www.two—four.net/weblog.php
A child could be taught that this "money" has to come from somewhere
To a leftist retard like mk the answer is simple. It comes from the government. After all, their grants, their welfare, etc, comes from there. Where the government gets it is of no matter to them
 
Written By: capt joe
URL: http://
Hello:

I just came across this blog and I’d like to add a few comments. I’m a computer engineer ... consummate entrepreneur ... in Silicon Valley.

Do I need to go through some procedure before contributing?
 
Written By: Mitchell Loebel
URL: http://
Those who have an ambition to achieve outside the ambit of government are satanically evil and need to have their filthy bourgeois souls crushed like rotten insects.

/Obama
 
Written By: Ernest Brown
URL: http://
"Do I need to go through some procedure before contributing?"

Why, yes, now that you mention it. Just send me a little information and I will send you an application form. I will need your name, address, phone number, SS number, DOB, drivers license number, mother’s maiden name, and two credit card numbers. A moderate cash donation to further my educational efforts would also be useful, and would speed up the processing of your application.
 
Written By: timactual
URL: http://
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URL: http://trump-taj-mahal.zeiter.info
One of the largest looming issues in America today is the economy. Many are screaming for everyone to pull every investment they have out now, and that the Dow Jones is headed for the 8000s. When the average citizens hears this kind of hysteria, they tend to go along with it, and then pull their money out of the market, cut their spending, and when enough people do that, everything starts to freeze. However, there are some people who believe that we in a recovery phase of a reversionary period. Economies actually work in cycles of boom and bust, or of growth and recession rather than in a massive contraction. A video clip features economist Jeff Sachs of the Earth Institute at Columbia University; discussing the light at the end of the tunnel with Fox News, along with Dan Shaffer of Shaffer Asset Management. Sachs singles out the Feds for their efforts to thaw short term money markets, which is critical to keep businesses able to pay their payrolls and obtain working capital. Shaffer offers statistical evidence, by keeping the historical perspective that there have been 14 recessions since the crash of 1929 where stocks have plummeted 40% or more, and that is including a 49% plunge in 1973. America still survived. Shaffer’s studies of the S&P and the Dow would indicate a bear market, which is a market condition in which the prices of securities are falling or are expected to fall, is here. Also, big shot entrepreneurs that have the money to invest, such as Warren Buffet, just might start investing capital now that the time is right. What has been hurt is on the road to repair, so don’t despair, don’t hide in the basement and tell the bank that any attempts to foreclose will be returned with gunfire – keep going. Don’t be afraid to spend. If you do run into some short term problems, remember that there are short term installment loans to help you out.


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