Joe the Plumber: The Obama $250,000 TAX bracket question

I need some clarification on this issue. Obama said everyone making less than $250,000 will get tax breaks. I take this to assume that if you make $260,000, you will still get a tax break on the first 250,000 and will only pay higher taxes on any income greater than that.

So when Joe the Plumber approaches Obama and complains about having to pay higher taxes because the business he is buying makes more than $250,000, is he referring to revenue or net income? If it's just revenue, what does it matter to him? His net income will still be less than $250,000 after paying all salaries.

If Joe does end up earning more than $250,000 net income, that tells me two things:

  1. Joe will be a rich guy. So why whine like he is some middle class guy.
  2. Joe will only be paying a higher rate on that part of his net income greater than 250K. Update [2008-10-16 3:43:55 by Pravin]: I just saw some article where they interviewed him. He seems aware of this. Why would he forgo buying a business just because of a 3% marginal tax difference on anything more than 250,000(36% under McCain, 39% under Obama). He is still getting a tax cut on the first 250,000. I think Obama should have made this point clearer in the debate. And Joe obviously has no clue about the difference between revenue and profits.

Am I wrong on both assumptions? Even if I am wrong on one of these two, Joe still ends up with pretty good money.

I just didn't think Obama explained it very well in the debate if I am correct in at least one of these assumptions.

Tags: 000 Obama small business, Joe The Plumber $250 (all tags)

Comments

15 Comments

Re: Joe the Plumber: The Obama $250,000 TAX brack

Obama already did:


by Shaun Appleby 2008-10-16 12:46AM | 0 recs
Re: Joe the Plumber: The Obama $250,000 TAX brack

What the hell is Joe whining about? Obama does tell him he will only pay higher taxes on the marginal income greater than 250K. If he is making a 250K profit, he is a rich guy. Hell, I worked hard as a programmer and I don't make even half of that. If he needs to buy more equipment, I am sure those costs will reduce his income below the 250K threshold anyway.

Plus, won't he still get the tax cut extended to the first 250K part of the income? So if he earns 300K, he is paying a measly 3% extra for the 50K while he is paying less taxes for the first 250K.

by Pravin 2008-10-16 12:59AM | 0 recs
Re: Joe the Plumber: The Obama $250,000 TAX brack

I know, if you read his interview with Couric you get the impression he was not an honest interlocutor:


And, you know, neighbors were outside asking him questions, and I didn't think they were asking him tough enough questions, so I thought, you know, I'll go over there. You know, I've always wanted to ask one of these guys a question and really corner them and get them to answer a question of--for once instead of tap dancing around it.

Brian Montopoli - text CBS 16 Oct 08

I agree with you.  And it's not like it's a complicated issue, either.

by Shaun Appleby 2008-10-16 01:42AM | 0 recs
Joe the Plumber's not registered to vote

Ben Smith at Politico notes that Joe the Plumber, John McCain's Everyman, appears to not be registered to vote.

by Beltway Dem 2008-10-16 03:54AM | 0 recs
Re: Joe the Plumber's not registered to vote

Good.  Red State Update had an exclusive telephone interview with him.

by Shaun Appleby 2008-10-16 04:28AM | 0 recs
Re: Joe the Plumber: The Obama $250,000 TAX brack

If he is making a 250K profit, he is a rich guy"

Yes but there are some people ,hard as it may be to believe who don't think things through like that. Joe might be one of them.

by Lodgemannered 2008-10-16 06:41AM | 0 recs
The Obama $250,000 TAX bracket question

I've got to wonder if it will be possible for a plumber to make $250k a year in the US ten years from now.  While Obama was probably right not to do this, he could have gone for the jugular and suggested that this is exactly the sort of job where income depends upon the wages of people in the community.

The greatest economic challenge the US faces during the next ten years might not be recovery from the current recession.  What we might find out when we emerge is that a lot of wealth in the US recently was based upon bubbles which are unrepeatable (just one example, the boost in consumer spending which came from people drawing upon inflated equity in real estate).

It's a cliche that the US has been living beyond its means.  Americans have no recent experience of the sorts of economic events which can cause real income and savings to plummet relatively quickly, though (eg. hyperinflation, massive capital flight, the government not being able to borrow enough to finance its debt).

Not saying these worst-case scenarios are likely.  The truth, though, is that we're heading into unknown territory, and no responsible economist today can say these worst-case scenarios are impossible (indeed, all one has to do is extrapolate from current trends).

So here's the answer I would have given Plumber Joe.  Do you want to go it alone or would you prefer it if we were all in this together?  Because your answer today might not be the one you'll want to give tomorrow.  

by IncognitoErgoSum 2008-10-16 01:58AM | 0 recs
Re: The Obama $250,000 TAX bracket question

He actually made your point about the plumber's benefit from his customers' wage earner tax breaks in the video.

by Shaun Appleby 2008-10-16 02:26AM | 0 recs
Joe the Plumber aka McCain Plant
First of all, I truly believe Joe the Plumber is a McCain plant. Second, if Joe the Plumber buys this business under a McCain administration, he'll no longer have to worry about revenues above $250K. Why? Because, like Bush, McCain is only interested in giving tax cuts to the Exxon-Mobil's in this country. McCain could care less about small business owners.

What is Joe the Plumber's problem with taxes? If Joe the Plumber (god, I'm hating that phrase) buys additional trucks for his business, he'll need some well-maintained roads to drive them on. I'm sure his business relies on sewage and other water-related infrastructure. Where does he think the money for those kinds of things come from? Without taxes, Joe will be paying more tolls on more roads. Without taxes, local governments will have to charge people (and plumbers) more to access the system. By the way, Joe, tolls are a form of tax. I just don't believe Joe the Plumber (aka McCain operative) understands the purpose of taxes. Finally, with an Obama presidency, taxes will no longer be for enriching the Halliburtons and Exxon-Mobils of this world.

by zenful6219 2008-10-16 03:19AM | 0 recs
Re: Joe the Plumber aka McCain Plant

Maybe a Ron Paul plant, he sounds like a 'flat tax' advocate:


During his telephone interview with ABC News, the Ohio plumber argued that the government should not tax some more than others and argued that this principle should extend not only to Americans at his income-level but also to the world's richest man.

"I don't like it," said Wurzelbacher. "You know, me or -- you know, Bill Gates, I don't care who you are. If you worked for it, if it was your idea, and you implemented it, it's not right for someone to decide you made too much."

Teddy Davis - Joe The Plumber: Obama Tax Plan 'Infuriates Me' ABC 16 Oct 08

No friend of progressive taxation, it seems.  Or 'socialism.'

by Shaun Appleby 2008-10-16 03:33AM | 0 recs
I believe your analysis is incorrect

My understanding is that, when Obama says that people who make over $250,000 will see a tax increase,that he is talking about an overall tax increase, not a decrease because of lower rates up to $250,000 and an increase only on income above that figure, which would likely lead to a net decrease.  Otherwise, I am sure he would describe his plan more favorably by raising the $250,000 figure to take account of marginal tax rates.

by DaveG 2008-10-16 04:28AM | 0 recs
Re: I believe your analysis is incorrect
Actually I do not have an analysis. Just questions. So how will this guy's tax burden increase by anything significant? I thought our taxation would be marginal otherwise a guy making 250,001 would be paying a lot more tax than a guy making 250,000.
Shouldn't the guy earning 250,001 be paying the same tax for the first 250,000 as the guy making 250,000? Even Obama mentions that in his explanation to the guy. He just did not explain it clearly in the debate.
by Pravin 2008-10-16 05:21AM | 0 recs
Re: Joe the fraud???

Did any one hear that this Joe the plumber guy does not make any where near the $250,000 he claims ?

by wellinformed 2008-10-16 05:26AM | 0 recs
Re: Joe the fraud???

I dont know why Joe the Plumber couldn't just be upfront and ask his question instead of making up a story?

That politico link further up on this thread has some interesting comments. It does look like the higher tax would only be on marginal income over $250K. Let's say it is 300,000. 3% of 50,000 is 1500. He is going to base buying a business that nets him a 300K profit on a measly 1500 dollar difference???? It is not REVENUE stream that will be taxed. Just the net profit. Not to mention he is going to pay less taxes on the first 250,000. So he probably ends up paying 1000 more at most. Not to mention he benefits from a healthier government treasury. Let's not forget the deductions a lot of businessmen take.

I call BS on this guy. Be upfront on the flat tax. There is no shame in advocating a flat tax.  Personally, I think a flat tax is not less progressive than the obscene CEO salaries that are unchecked regardless of which party is in power. I would gladly trade transparency and slow vesting of executive salaries past a certain formula(either a dollar figure threshold or a mutliplier based on industry minimums for the lower end) if it means we end up with a flat tax.

I personally think Obama should get rid of deductions for sporting tickets and other entertainment as a cost of doing business.

by Pravin 2008-10-16 05:34AM | 0 recs
Joe the Plumber is a buffoon

They're interviewing this clown on MSNBC right now. He opposes Social Security (for himself and his retired parents, too).  Prefers to invest his money for retirement in the stock market (he can do that, its called a 401 K) He hates the government, doesn't want anyone "telling him what to do".

He's an immature fool and doesn't represent average Americans.  He does seem to be a Rove plant, why else would the media be covering him so much.

by Betsy McCall 2008-10-16 06:10AM | 0 recs

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