My boss said Illinois (and democrats, specifically) are Very Bad to the small businessman (read: Her Husband). I am woefully uninformed on this subject. Has the small guy had to pick up the slack for the large companies, and is this a democratic problem? Chicago is very democratic, but all the collar counties, as well as suburban Cook County are strongly republican. Is Obama at fault for the high taxes the little guy pays? I’m not sure how to even look this up, so if anyone has a cite I can look at, I’d be most appreciative. Thanks!
I think there’s already a GD thread about the relative economic merits of Republican and Democrats.
But as to the more factual question of the tax burden in Illinois: it’s rated about 30th out of the fifty states.
Well, nationwide, states often give big businesses tax breaks in order to get them to built facilities in their state. Other people thus have to make up the loss in revenues.
But this practice cuts accross party lines: both Democrats and Republicans do it.
Yes, this is my understanding as well. I guess someone could blame either party, but the reality is that big business knows that jobs are most important and counties or states will do what they have to do to draw good companies to the area. I think it does put a tough burden on the small businessman, but I don’t see any way around it.
In another thread, someone asked how I (an indy) would be affected by Obama’s tax plan. I don’t know since I don’t do a bulk of my taxes, and it all depends on how things shake out with my other investments, though I concluded from a CNN site that I would save less under Obama. The CNN site, like other sites, fail to actually show the breakdown of the tax plan and do not list their assumptions (like how is the income derived, what are the deductions, is home ownership invovled, etc.) So, I take all of those with a grain of salt, though I do like the CNN analysis because it’s easier to read and has a nice calculator. Almost all of the research I’ve seen done is by the Tax Policy Center, and I question their methods and their biasness.
Anyway, from politico.org I found this analysis (again, I’m unsure of their bias):
Factcheck.org, has a somewhat-counter analysis, but I found the analysis to be less than stellar, and appears to be somewhat at odds with the above quote. To be fair, the analysis tries to point out errors in McCain’s statements (23M small businesses will have their taxes raised as single filers, they will have less capital to do/grow business).
With the first part (the number of small businesses affected), I disagree, and I may be wrong, but because a person can incorporate (or not) and derive income from say a book deal (like McCain and Obama) or like me and my parents (as landlords) and still be called a small business. They also question lawyers and accountants as “small business” (again, I wholeheartedly disagree). They also take issue with “small businesses” with no employees. The fact of the matter is that even with no employees, the small business still interacts with the market, even those small businesses used as a true tax shelter***** should still count because even tax shelters still have to act as a business (i.e. it is nearly impossible to write off all expenses as a small business).
Additionally, factcheck.org does agree that there are those people who are organized in such a way that they will pay more under Obama. However, as I stated above, their analysis of the of the number of people is something I find to be disingenuous. The limit the number of small business to those in the top brackets AND have employees.
The fact of the matter is that taxes will be raised and they will affect more than just those who own the business (it will effect their employees, too). Not all small business owners take all their profit for themselves, but distribute it away to their employees, or use it grow infrastructure and become more competitive. The small business market is a growing and is now a highly-sought after market. Just days after my corporation announced an initiative to tap the SMB market, so does Microsoft. Every large corporation has some SMB team/division or another.
***** – in this case, meaning that the actor is taking a tax deduction/avoiding the tax consequences of his actions in the market, which would have otherwise been applied because he was entering the market anyway
Thanks for that information. It’s mostly over my head, but it is rather shocking that they’re talking such high tax rates. This guy is a recycler and is the only employee. I don’t see how a guy could even operate with such a high tax rate. Seems to me we would give them a break in order to encourage the innovation and blah blah blah that both sides are talking about. I’m really in the dark about this kind of thing. Can someone explain how anyone would think this is a good idea? Why would a person even entertain the thought of opening their own little business and even think they could make a go of it?
have a small side business in IL; the taxes you pay as a sole proprieter are basically the same as you’d pay as a employee making the same amount of money, with the exception that you get to take deductions and you have to pay the “self employment tax” (the medicare and SS that your employer normally pays). That 50% tax may seem scary, but it’s really 35% tax (which is the same as you’d have making 250k+ as an employee in the new plan, IIRC) plus the 15.3% medicare/SS. As a sole proprieter you have to pay that extra 7.65% that your employer would have covered, plus healthcare, but you also get to deduct things employees don’t. (And you get to deduct half of your self-employment tax too.)
Rereading the politico doc, there seems to be some unclear figuring:
…but the thing is, the self-employment tax gets cut down after about ~100k since you don’t pay 12% for social security anymore. So you get the highest tax rate on income that still requires you to pay payroll taxes, while once you no longer have to pay soc sec it goes way down. You may indeed have some income at 35% + the payroll taxes, but they way they say it it seems like all your income in the top bracket is at 50.3. Which it wouldn’t be, everything past the soc soc cutoff would be 12% lower.