Obama Wins! - So What's Next?

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So they don't count? Talk about class warfare...maybe they are "mini" businesses.

 

Martaug, would you please show where I made reference to Mom and Pop businesses making 25K per year as a baseline? Oh, right....I never did that. I understand, though. It is easier to erect a straw man than it is to actually pay attention to what people are saying.

What I did say was that by far the vast majority of non-incorporated small businesses makes less than $200K per year. I said this not because I was trying to confuse the issue, but because it is true. Many "small" businesses that are still subject to the income tax and making in excess of, say, $300K per year do exist, but most of them are non-employer businesses. Employer businesses with that much revenue almost always incorporate and are therefore not subject to the income tax.

Of course, there's an easier way to knock your house of cards down. Businesses usually have to compete with each other. If John raises his prices because his taxes go up, he may end up losing customers to Phil, who kept his prices the same. This idea that tax increases only get passed on to the poor and middle class may sound alright in a vacuum, but it doesn't work so well in the real world.

 

No chandos, they count but represent a much smaller percentage than most think.

Drew, you did not specify a small mom & pop but that is the impression you gave.

Incorporating helps protect your personal assets but doesn't keep you from paying taxes, as any of the accountants here can tell you. It can lead to paying even more taxes due to "pass-through taxes". If you set up your corporation as an S-corp or instead form an LLC you are protected from this.

Even my buddy who owns 3 gas stations & has combined annual sells of ~$5 million is still a small business. Please redefine your definitions to the correct legal ones.

 

So, martaug, will your buddy charge more than all the other gas stations on his street if his taxes go up? Didn't think so. Unless he has a prime location, he knows damn well that raising his prices above those of his competitors will cost him money. If he already has a prime location, he's already charging more than the competition -- and he knows damn well that there's only so far he can raise his prices before that, too, costs him money. That said, martaug, don't tell me you live in such a tiny bubble that you believe your buddy is somehow representative of all small business owners.

In the real world, where the poor and middle class primarily purchase their goods and services from less-expensive chain stores that pay their taxes at the corporate rate, raising taxes on the wealthy doesn't cost the poor more money. Walmart, Sears, Taco Bell, and EXXON all have something in common. They are either corporate (and, therefore, completely unaffected by raising or lowering the income tax) or they have their costs mandated by a home office. Either way, a change in the income tax doesn't affect their prices one bit.

For those business owners who aren't corporate and don't have their prices pre-set by a franchiser, market forces will still keep their costs in check in most cases. Competition is a beautiful thing.

 

I doubt they would charge more, but read this.

Anybody else think that this isn't the way to get out of a recession? Taxing small business has never been a way to spur job growth.

 

I'm completely confused by this attorney TGS is talking about. I'm assuming that her current salary is only a little over $250K, or she wouldn't be trying to get under the threshold. She wouldn't be so foolish as to think that she would not hurt her standard of living if she was making $500K, and a suddenly started making $250K to avoid the taxes.

So say she was making $300K, and she was trying to get under $250K to avoid the tax hike. As I understand the plan, the 3.6% tax hike (from the current 36% to the proposed 39.6%) would only affect her income earned in excess of $250K. So all of the taxes she pays up to $250K would be the same before or after Obama's plan goes into effect. For income in excess of $250K, she currently pays $18K in income tax on the final $50K. Following the Obama tax hike, she would pay $19.8K on the final $50K. It seems absurd that she would work to get under $250K, when the tax hike on her current salary would amount to about $35 per week.

So either I'm totally missing something here, or this woman is assuming she's going to be paying a lot more taxes than what Obama's plan actually calls for. (Maybe she thinks it's 3.6% of her entire salary? That would amount to about $10.8K in additional taxes... which still wouldn't justify her trying to make $50K less to save $10K... What am I missing here?)

Hopefully, we won't still be IN the recession by the time the changes take effect. Obama is not changing anything in Bush's tax laws that are in effect through the end of 2010. I suspect that if we are still in the recession in late 2010, he may change his tune on his proposed tax increases in 2011.

 

We are probably not in a recession, but a depression. The foolish business person who wants to decrease her customer base to save a few bucks on her taxes should learn how to run a business. But I'm sure all those customers she wants to turn away will be picked up by a more agressive company that wants to write some business and increase its customer base.

Job growth as nothing to do with taxing small business. There are two major parts to the current depression:

1. The market, which has lost over 50 percent of its value.

The basic problem is still there - the toxic assets that no ome wants to fix. The government may not be able to repair those assets because nationalizing the banks is too politically unpopular. And the government does not want to commit taxpayer dollars to Wall Street without something for the taxpayers in return. Hopefully there is some kind of plan between the financial institutions and the government to get these assets off the books to allow credit to start flowing.

2. Consumer spending, which drives most of the economy. This is what creates job growth.

Ask many small business owners what they need right now and the answer is customers (we also know they need a good line of credit, but see item #1). By cutting taxes for 98 percent of consumers, the government is hoping to get them to spend some money with those "small business" people that the political opposition has been yapping about. By increasing government spending across the board there is a feeling that it may help business (all sizes this time) and increase consumer spending as well. The idea is to restore the customer base for all kinds of businesses.

The politics of all this is "who gets to pay." Obama wants the rich to pay; the opposition wants the middle class to pay. The middle class is already pissed off because of all the taxpayer money spent to bail out Wall Street and the large financial institutions, which has pretty much been screwing everybody over. The middle class feels that it has already paid its fair share. The rich, many Wall Street execs, have been the recipients of most of this taxpayer bailout money. The government has been propping up their jobs for them and paying their bonuses. So the middle class would like its share as well.

Nevetheless, all kinds of people have been hurt by the decline in the market. That's not really a "class" issue. Major shareholders have lost billions, and many families have lost over half of their 401Ks. Thank God that GWB was stopped from moving people's SS retirment accounts into Wall Street.

At the center of this is the housing market, which needs all of the above to happen to recover. That will probably be several years, and many homes will never return to their former values. This depression will more than likely be more mild than the Great Depression, but it will still take a few years from which to recover. The big thing is all those toxic assets on the books in the large financial companies. They have to be sold off, probably well below market value. But, who gets to pay for all that bad debt?

 

I definitely agree. I'm still paying into my 401k fund, but it may very well take a decade or more for the Dow to get back to where it was. 14,000 seems like fantasyland these days. And the housing market - we can't say prices will never get to that point again, but it very well may not happen in our life times.

Of course, all of these predictions are assuming that most economists are correct that we are looking at 2010 for the beginning of an economic recovery here. What happens if they are wrong? The Dow dipped under 7000 this week. Everyone is hoping that we are finally nearing the bottom, but what if it drops under 5000? I've also seen reports that many people who bought houses at the end of the housing boom (2004-2006) have interest only or adjustable mortgages that are going to reset in 2009-2010, and that we may be facing another 10 million foreclosures in the next two years. If that's true, it's really scary as it means the number of foreclosures coming in the next two years exceed the number that have occurred in the last two years.

 

Actually drew, 2 of his stations are prime location stores, first store off the the exit-ramp from the Interstate Highway. Since 75% of your average highway travelers won't pass up the first station he can charge what he wants(right now he is less than the stores 1/2mile away). The third store is on the backside of the airport & is the only station for about a 4 mile radius & is consistantly 15-20 cents higher than the city average. People will pay a little more for convienience, always have.

Also the guy up the street that owns the local gunstore is a small business owner, so is the widow that owns the golfcourse on the other side of the county(even though she has probably 50+ employees).
The old farmer that has 2,000+acres & owns 2 Dairy Queens(& looking to acquire 3 others in a nearby town), still a small business, the old Sicilian couple that have 4 pizza places & 2 sit-down italian restaurants(in 3 different towns), small business. I know lots of small business owners drew, no "little bubble" for me.

Aldeth, look at the figures, the obama administration plans to collect $338 BILLION more from those making over $250k/year just in taxes. So please ask them. Plus you also lose itemized deductions if you make over this amount. So it's ok to itemize if you make $249k but not when you make $250k? How stupid is that.

I've seen a few economists that are saying under 5,000 before the dow bottoms out.

It's funny, you hear about how bad the home market is but you look at certain segments & you wouldn't know it from them.
We just had an IKEA open in charlotte 2 weeks ago, they have sold 61 kitchens in that 14 day period. Thats a pretty good number of kitchen builds/remodels for a business that just open, considering we have a pretty good number of cabinet shops in the surrounding 4 counties.
Those who are building in the countiy & outer suburban areas are doing much better than those building in the cities & inner subarbs.

Chandos, i think if you check that the percentage of the SS that they wanted to move would have been in long-term, slow-growth, low-risk bonds & such, not High-risk securities.

 

Those are great numbers, considering that they are installs, Martaug. I hope a lot of that business is coming your way. It makes me happy to see you getting some business. My wife's sales people, unfortunately, are using the economy as an excuse not to sell. Although her kitchen cabinet people are selling OK, but not great, nothing like those numbers.

I own some of those "low-risk" bonds right now. Good luck!

 

Hush you!! Remember i do custom kitchens!!
It's ok though, the appeal of the ikea kitchens is that they are good quality basic kitchens that are available in the 8 most popular colors today.
Most shops have a 2-3 week build time for 2 or 3 base colors & an additional 1-2 weeks for a special color.
Freakin' ikea will deliver a custom color in 1 week (or 3-4 days if you pay a rush surcharge). It's gonna hurt some of the higher priced base cabinet shops, however most of the weaker ones have already gotten out of the business.
As you can tell, i know a couple of people working at ikea

 

Again, it seems that the country is making strong distinctions between leadership ability and character, and actual policy. Obama has accomplished quite a bit in his first 6 weeks in office and his personal approval rating is very high. Yet, on actual policy he seems a little off, with more Americans unsure about the stimulus and the budget plans. I have to say that this pretty much mirrors my own feelings about Obama thus far.

Both plans have a bit too much pork in them. But this is fairly typical, as political payback for supporters. We saw this early on with GWB. His tax program, giving large paybacks to the rich, was one of his first priorities. He said he would do it during the campaign and indeed he made good on it. Now, Obama has worked pretty much the same thing, taking back from the rich and giving to the middle class, exactly what he said he would do during the campaign.

IMO both the stimulus and the budget could have been targeted a little better towards the economic fire burning down the country atm. I saw that Geithner is predicting only a 1 percent drop in the GDP this year as a result of the stimulus and budget. If he's correct, great. But that seems somewhat optimistic if you ask me.

BtW, the Republicans are doing awful:

http://www.msnbc.msn.com/id/29493021/

 

Are you kidding me chandos? Quoting something negative about the republicans from obamatv(msnbc) is like asking for a good review of a liberal from rush limbaugh. They are both so biased as to be very(no, extremely) unreliable.

Oh BTW, obamas presidental approval rating(via rasmussen) which was at +30 on inauguration day is down to +13(& has dropped as low as +8 last week) so he is losing support not gaining it.

 

Sorry, Martaug, but the poll is an NBC/ Wall Street Journal Poll, not MSNBC's.

Same poll. Obama gains.

 

I'll stick with rasmussen, anything affiliated with nbc(like msnbc) i'm leary of.
40% strongly approve & 27% strongly disapprove of obama in their latest poll. The disapproval rating has steadily(but shakily) trended upward & the approval has steadily(but shakily) trended downward.

 

If the proposed change to itemized deductions passes -- a cutoff for itemizing occurs at $250,000 AGI -- charities are going to take a huge hit. I personally think every dollar given to a charity is more important than any dollar put in the stimulus package.

 

Something I have noticed about network news channels are that the programs relating to the news and politics are much more heavily biased than the actual news broadcast. If you're just watching the nightly news, it doesn't really matter whether you turn on Fox or NBC. However, if you tune in for commentary, it makes a HUGE difference. Fox has the likes of Bill O'Reilly, while MSNBC has the likes of Kieth Olbermann - neither of which can be taken seriously as objective sources.

A general question: In the stimulus package with the tax rebate, is everyone getting just a check or a check and a reduction in taxes (assuming you make less than $250K). The reason I ask is that the direct deposit of my check from work last week was $2 higher than normal. If that's the "tax break" everyone was getting so excited over, and that's what we're relying on to fix the economy, then we're in big trouble.

 

Yeah, I've heard the same about FOX. However,you can't compare a certain commentator to an entire TV station, at least not if you want to be taken seriously.

 

Rasmussen has a notoriously flawed polling model and regularly asks leading questions. I'd find someone else, unless proving Chandos wrong is more important to you than being accurate.

And I agree with Aldeth...for general headline news, usually any network will do (I actually think Fox's Shepard Smith is one of the best programs, and the only watchable program on FOX) since most headline news stories are generated by wire services like the AP and McClatchy. But anyone interested in facts and objectivity should generally avoid the commentary shows - like O'Reilly, Hannity, Countdown, Rachel Maddow, Lou Dobbs, etc. They're paid to be partisan douchebags who generate ratings by throwing meat to their partisans and irking their detractors, not reasonable Socratic debate. Serious shows don't stay on the air for long these days, unfortunately (well they do, they just end up on PBS).

 

And yes we are in big trouble.