Business majors... help me out....

[Bigmack]

I'm having a hard time with the $250K break-point in the tax plan that Pres Obama is hopefully pushing.

The RW is saying some companies.. family companies and such... make more than that. (I know there are huge companies that get enormous tax breaks)

I don't understand the whole thing. If a company makes half a million bucks, can't they deduct all the expenses they have and deduct the wages they pay the others in the company... even family?

By the time they deduct all that crap, if they still make over $250K, I don't have a problem with hitting them with taxes.

I probably don't even know what questions to ask, so any of you who can school me... I'd appreciate it.

[nadinbrzezinski]

1. Having run a business

you can deduct your expenses... in the most simple of ways... which means I was able to deduct my Website, yes those what 90 bucks I paid a year? They came in the red column. So you end up paying taxes on the actual INCOME after deducting expenses...


There is more, most business do not make 250K either... not even BEFORE deducting their expenses.

[DesertFlower]

3. i had my bathtube refinished by a

small company. i asked the owner who came to finish up if he made $250,000 a year. he said "i wish".

[DesertFlower]

2. i don't understand it either, but

i think you have it right.

[Bonhomme Richard]

4. Yes, the owners will deduct all business expenses including payroll..

but profit, at least for S Corporations like I own, is considered personal income and taxed as income. Here is the reality. Most owners of small businesses ( I'm not talking about lawyers, doctor LLC's and that kind of stuff) do not make over 250,000 but if they did they might spend that tax cut on stuff or just invest it. They will not use it to hire people because businesses do not expand unless they believe it will be profitable to the company and if it were profitable to the company they would not need a tax incentive to do it. By not giving them the tax cut there is somewhat more of a chance that the business owner will stimulate the economy because the owner will try to reduce his taxable earnings. The only way he can do that is by increasing his companies expenses. He would be more inclined to invest in a new machine or something like that because he will lower his taxable earnings and at the same time gain an asset for the company which he owns anyway.
I hope I made some sense as it has been a long day and I am a bit beat.

[nadinbrzezinski]

5. Let me translate it to English

for folks.

The only reason why a business expands is... if there is demand.

(I know you wanted to go into a lot more detail but it is that simple actually... I never got to the expansion phase, beyond a couple freelancers)

[MedicalAdmin]

7. I own a medical clinic

And we don't hire unless and until there is demand for more staff.

For small businesses it is all about demand. For big corporations it is all about corporate
Welfare.

[Bonhomme Richard]

6. A side note. Most business owners I know put most the...

money they make back into the business. The majority owner of a new company in DC that has sales in the 5 million range pays himself 80K/yr. while some that work for him make more. A guy like that would rather invest in his business rather than himself. He is looking long term, not for the quick buck.

[annabanana]

9. but they'd still have the tax cut on everything UNDER 250k, right?. . n/t

[Angry Dragon]

11. Yes

It would be the same as personal income tax rates
The percentage goes up as you go into different brackets

[Exilednight]

8. Now you see why multi-billion corporations pay no taxes at all. n/t

[haele]

10. I think contractors who have small LLC businesses with low overhead might make more

Two or three guys in a virtual-office (or as I call it - Business by Blackberry) partnership to contract out specialized thinking type work;independent business "evaluations" and assessments, contracted fund management, day-trading, marketing analysis, business coaching/advice or lobbying work for a hundred or so an hour might make more than $250K a year on income if they identify their business as their income. But they're not going to be in the position to use their Bush Era tax cuts to hire more people because they're just not going to hire more people. They don't have an office, they don't have staff, and it probably wouldn't matter to them if their LLC expanded or not in the long run. They're probably around two or three percent of small businesses.

The family business that actually produces items or provides a broad-based service that requires employees, or has a storefront of some sort is not going to see any change to their business if the Bush Tax cuts expire for the wealthiest 2% (but they might see individual taxes rise by 1 to 3% depending on their income level) They have all sorts of deductions, even if they might "work from home" and use personal income tax codes when they file.

Unfortunately, even though the "small businesses" that are the actual backbone of the economy in terms of employment are the latter, not the former, the media likes to play up an "onerous" burden to the 2% who would at most have to start thinking about how they file their deductions so they can keep their current lifestyle going without worrying about having to cut back.

I don't begrudge those who have individual incomes of over a quarter million dollars, but honestly, their use of the common services that government oversees, including many programs and agencies that enable them to make that sort of income and keep it safe, are unwilling to pay for those services, they're nothing but greedy fools.
The government's services that provide and safeguard their level of wealth, their safety, their infrastructure usage (especially water, power, mass communication and roads) and their property is far cheaper on a yearly basis than paying individual private companies to do the same jobs.

I'm not talking about taking away every dollar they make over a million a year, but I am asking that they pay their fair share for their "footprint", like everyone else has to. Why should the middle class support them? What do they think the American workforce,from truck drivers and grocery baggers to police and nurses are - indentured servants working off the privilege to exist?

Haele