Forgive me if I sound naive on this subject as I am not as knowledgeable as a lot of my fellow Dopers on all things political.
Anyway, my understanding is that taxing the rich would hurt the small business man. Thus they wouldn’t hire any new people to work for them.
My brilliant idea is:
Define exactly what is a small business man.
Once that’s been established, offer a tax credit for every person on their payroll.
Any reason why this isn’t a good idea?
http://www.rawstory.com/rs/2011/07/21/four-indicted-on-helping-wealthy-taxpayers-hide-assets/
Who taxes the rich? here is a story about the prosecution of Swiss bankers for hiding thousands of American wealthy people’s assets so they can evade taxes.
That is not as bad as the Cayman Island building that is the headquarters of nearly 19,000 companies. Of course it isn’t. it just allows them to evade taxes.
As a tax lawyer I would say:
what the Swiss bankers are doing is fraud (or at least facilitating it);
there is nothing illegal or even unethical about locating your company in a tax haven as long as America continues to tolerate tax havens;
I’m surprised to hear there are only 20K companies in that building.
There are other buildings too. But it is the worst. We regular people just pay our taxes and watch the rich have their lobbyists compel the pols to pass shady law after shady law helping them evade some more. Then people on this board bitch about how bad it is for the poor rich people. Really dumb.
The deal struck today by Speaker Boehner and President Obama will serve to simplify the tax code and perhaps eliminate many loopholes.
I’m not a tax attorney or business owner. However my understanding is that taxes are on net income, not gross revenue. And labor costs are already deductible. So I don’t see why it would matter what the tax rate is, you aren’t being taxed on the cost of labor anyway.
http://www.irs.gov/businesses/small/article/0,,id=109807,00.html
Other Types of Business Expenses
Employees’ Pay - You can generally deduct the pay you give your employees for the services they perform for your business.
Retirement Plans - Retirement plans are savings plans that offer you tax advantages to set aside money for your own, and your employees’ retirement.
Rent Expense - Rent is any amount you pay for the use of property you do not own. In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business. If you have or will receive equity in or title to the property, the rent is not deductible.
Interest - Business interest expense is an amount charged for the use of money you borrowed for business activities.
Taxes - You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses.
Insurance - Generally, you can deduct the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business, or profession.
Net revenue is usually less than 5% of gross revenue for most businesses.
It’s a myth. Small business owners, by and large, aren’t rich.
That ain’t easy. Small businesses can range from a lawyer hanging out his shingle work from home, to a roofer nailing shingles with day laborers working out of his truck, to a family bakery, to the man who telecommutes from his closet with global clients. They’re everywhere, and they’re often invisible. They can’t be easily defined. They don’t have special reporting, shared needs, or even that many common experiences. They could be investors making millions every year, or part-timers selling crafts on the side for an extra 100o$ a month.
According to income taxes they are. This is because, as Wesley Clark kinda mentions but doesn’t understand, sole properieterships aren’t taxed on net income, but personal income, and a lot of those deductions don’t always work for you in practice. Note that tiny little bit about title - if you own the building, you get no break, even if it’s a business investment. If you go into debt, you get a break for that, but you probably can’t afford it. Small businesses are very often run as sole proprieterships or partnerships - which get no favorable tax treatment.
The other problem is that deductible business expenses aren’t as easy as you think. Most small business owners can’t, or don’t, deduct everything related to the business, and it isn’t always 100% deductible. It has to meet various requirements, which are not always perfectly applicable to the real world (and often have jack squat to do with the real world). For example, many people use a standardized Home Office deduction, which may be only a small portion of what you actually spend on one. And the more you try to deduct, the more complicated your taxes get, but accountantss are very expensive themselves. It’s not unusual for your real income to be a fraction of gross, but you still get taxed on a significant chunk of that.
So the fact that they aren’t rich at the end of the day doesn’t matter. They often get taxed at astounding rates because of the odd way tax rates are structured, and don’t neccessarily have a whopping personal income at the end of the day. They also take on much more risk even if they do make out well, and don’t grab any of the (stupid and poorly-legislated) tax discounts that corporations or even LLC’s can get for all kinds of things.
Now, if you know how to use it to your advantage, the tax benefits work pretty well. There are useful deductions and ways to spend your money to very good effect, and the tax forms can be a lot easier. But it’s definitely not the case that sole proprieters get away with low tax rates, and they’re often the most vulnerable to any business regulation and tax changes. They can’t afford a team of experts to restructure, refine, or reuse their resources, and spending time on that takes away from actual work.
Cite?