Taxes

[Neil D]

Neil- When Obama wants to allow the rich [rich= those who make $250,000/year or more] to pay more taxes, and allows the middle class more relief from taxes, you get upset....

This is completely false.....middle class more relief from taxesObama is not "allowing" more tax relief,their tax liability will stay the same. Except of course the extra dollars they will have to pay for goods and services

[Dr. Shane]

I am not convinced that raising taxes on those earning more than $250K is that bad of an idea. It will cause small business to make sure they don't earn more than $250K. Instead of keeping money for profits, they will re-invest the money into the company and thus keep their profits under the $250K threshold. Their reinvesting will stimulate the economy.

[bonnie]

I am not convinced that raising taxes on those earning more than $250K is that bad of an idea. It will cause small business to make sure they don't earn more than $250K. Instead of keeping money for profits, they will re-invest the money into the company and thus keep their profits under the $250K threshold. Their reinvesting will stimulate the economy.

If it causes small business to earn less,what is the benefit?

Earning less pays less in taxes.

Rather than re-invest in business they are pulling in their horn till they see what Obama does. Many that are closing are doing so because of the cost of health care. A trip to their accountant very quickly showed them how much they would pay for this "cheap healthcare"

Now they are going to get hit again when the tax cuts expire,some are just now finding out what is in the so called "jobs bill"

[Dr. Shane]

It won't cause them to gross less. It causes them to net less. The difference is reinvested in their company. For example, a printing company may buy new printers or computers. A painter may buy new pick-up trucks, ladders, scaffolding, sprayers, etc. An auto mechanic may buy a new lift, a new brake lathe or build a new garage. These small businesses will invest their profits into their businesses instead of using them to build up their cash reservoirs. By doing so they will keep their profits under the $250k threshold.

[bonnie]

It won't cause them to gross less. It causes them to net less. The difference is reinvested in their company. For example, a printing company may buy new printers or computers. A painter may buy new pick-up trucks, ladders, scaffolding, sprayers, etc. An auto mechanic may buy a new lift, a new brake lathe or build a new garage. These small businesses will invest their profits into their businesses instead of using them to build up their cash reservoirs. By doing so they will keep their profits under the $250k threshold.

As to your example of a painter..During the Carter years my husband made do as far as was possible. We didn't know how bad it would get and spent very sparingly

Our auto mechenic is not reinvesting in his business.He is holding tight to what he has.

The business men stil have to have customers coming thru the day on a regular basis. The customers with money to spend are not nearly as frequent as it was.

[bonnie]

It won't cause them to gross less. It causes them to net less. The difference is reinvested in their company. For example, a printing company may buy new printers or computers. A painter may buy new pick-up trucks, ladders, scaffolding, sprayers, etc. An auto mechanic may buy a new lift, a new brake lathe or build a new garage. These small businesses will invest their profits into their businesses instead of using them to build up their cash reservoirs. By doing so they will keep their profits under the $250k threshold.

I am glad you were not in charge of my husbands business.

A company that sets a limit on what they can earn does not invest more and more in a stagnant business.

It is pretty tough to expand with those limitations and less and less consumers coming thru the door.

A tight economy means tightening the belt for most savvy business men.

Maybe things work differently in Mn than where you are. As the business owner I mentioned that was on the radio stated he can and will call it quits unless the tax cuts are extended. Thru his business there has been a loss of 140 jobs.

Our very successful local hardware has put off expansion to see what Obama does. Expiring the Bush tax cuts means he will not expand, He has reduced his employee's to 29 1/2 hours per week.He highly regrets the expansion he pursued just prior to the economic mess.

My brother laid off 50 employee's. Could he have stayed in business. Yes,he has been very successful. He does not see any reason to keep feeding the parasites.

These businesses and all those like them doing same have a impact and it is not good.

[Neil D]

Bonnie,

Your pessimistic view is quite rampent among people...But small businesses do need some revamping/retooling, and with additional tax credits for buying capital equipment added to an already friendly tax code for small business, seems to me that there is more carrot than whip...

[bonnie]

Bonnie,

Your pessimistic view is quite rampent among people...But small businesses do need some revamping/retooling, and with additional tax credits for buying capital equipment added to an already friendly tax code for small business, seems to me that there is more carrot than whip...

Sometimes a pessimistic view is based in fact. If you do not need capital equipment you do not buy in a tight economy if you have two brain cells to rub together.

The tax code is not going to be very small business friendly.

Obamacare is going to be a job killer and most haven't a clue what is in it.Small business owners are taking their facts and figures and having there accountants figure out where they will stand.It is not a pretty picture.

The expiring tax cuts are going to be a double whammy.

Tax credits are not enough to convince a small business owner to expand.Obama is convinced if he only makes money available to borrow everything will be fine. Small business owners do not want to borrow to meet payroll. They need consurmers coming thru the door

During the Carter years most of us that were small business owners did not expand,did not buy new equipment.Every penny was watched so you could meet payroll and hopefully have enough left over to provide for your own family.

You take any job you can get.Many times my husband worked after sundown on sabbath and sundays.Sometimes not coming home till sunday night.We were not buying new equipment.Only praying and hoping that what we had would make it thru.

Before you think that all is small business friendly,take a lng look at the health care bill and the new so called jobs bill.

[Dr. Shane]

As to your example of a painter..During the Carter years my husband made do as far as was possible. We didn't know how bad it would get and spent very sparingly

Does your husband net over $250,000/year? If not, he will benefit under Obama's proposed plan. If he does net more than $250,000/year, he can avoid the high tax bracket by using some of his profits to invest in the business. The business can buy real estate and then sell it later when circumstances change.

[bonnie]

Originally Posted By: bonnie

As to your example of a painter..During the Carter years my husband made do as far as was possible. We didn't know how bad it would get and spent very sparingly

Does your husband net over $250,000/year? If not, he will benefit under Obama's proposed plan. If he does net more than $250,000/year, he can avoid the high tax bracket by using some of his profits to invest in the business. The business can buy real estate and then sell it later when circumstances change.

The last thing a small business should be doing is spending unless a necessity.Buying real estate is probably the furthest from their minds.

My husband is retired by the way

[Dottie]

I have heard that small business owners count all of their income as taxable; that they do not get to deduct expenses from the total, and that it is considered personal income. Is that correct or just another way to get people riled up?

[Liz]

I have heard that small business owners count all of their income as taxable; that they do not get to deduct expenses from the total, and that it is considered personal income. Is that correct or just another way to get people riled up?

We run a small computer business out of our home, we certainly deduct expenses.

[Dr. Shane]

I have heard that small business owners count all of their income as taxable; that they do not get to deduct expenses from the total, and that it is considered personal income. Is that correct or just another way to get people riled up?

Small business are taxed on their net profit.

Lets say a painting company gets a contract for $200,000. They would be taxed on their profit. I'll try to make this simple.

Contract: $200,000

Material cost: $80,000

Labor cost: $75,000

Overhead costs: $20,000

Profit: $20,000

In the above example, the company would be taxed on the $20,000 profit which is 10% of the contract. Obviously they cannot afford to pay 34% taxes on the contract when their profit is only 10%.

So if this painting company gets enough work that they earn $250,000 in profit, they will get hit with a tax hike. But let's say their projected profits are $350,000 and they want to avoid the tax hike. What could they do? They could purchase a piece of rental property for $150,000 cash. That would drop their profits down to $200,000 and thus they would avoid the tax hike and have a piece of rental property that would generate additional income for the business and could later be sold.

[Dr. Shane]

I worked for a guy once that bought an RV and wrote it off as a business expense. He did this because he claimed the use of it was a benefit for his employees. He had the employees keep a mileage log of when they used it and the first year he owned it the employees put on 30,000 miles.