tag:blogger.com,1999:blog-3589378.post44825450481689278..comments2023-10-21T05:40:55.660-04:00Comments on man with black hat: Joe Plumber’s EconomicsDavid L Alexanderhttp://www.blogger.com/profile/13871706129906941567noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-3589378.post-41242434471904343372008-10-16T02:01:00.000-04:002008-10-16T02:01:00.000-04:00I own a business with several employees. I'm an S ...I own a business with several employees. I'm an S corp, so all profits funnel through to me. My best year we made (grossed) about $750k. By the time I paid all expenses and employees, I did not make near $250,000 nor even $200,000. In most service businesses your lucky to bill 75% of your time, often closer to 60%. The more service you do, the less billable hours. The more installation, the lower the hourly rate.<BR/><BR/>But lets say I was making a net profit of $40k per employee (doubtful). So I've got 6 employees and I'm making $240k. If I hire one more guy, I make $280k, but I'm in a higher bracket, so I probably break even, maybe lose a little. <BR/><BR/>So I either stay at 6 employees, or I hire 2. The 1st is a wash, the 2nd makes me more money. What's the big deal? All it really does is make me try harder to make more money, to offset the taxes.<BR/><BR/>If you're netting (taking home) $250k or more, think about this. If you're in a room with 100 people, you're probably one of the 5 richest in the room.integratorhttps://www.blogger.com/profile/07453426254788713133noreply@blogger.comtag:blogger.com,1999:blog-3589378.post-59876194748484961872008-10-15T23:32:00.000-04:002008-10-15T23:32:00.000-04:00you are implying that distribution of wealth is th...you are implying that distribution of wealth is the same for everybody the top 10 percent have over half the wealth. So the rich guy is drinking way more beers the then others. your analogy is charming and simple. but this situation is not simple.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3589378.post-18773931925068616352008-10-15T18:27:00.000-04:002008-10-15T18:27:00.000-04:00Digging deeper, it appears he just didn't know wha...Digging deeper, it appears he just didn't know what he was talking about. Being on the spot, I don't question Obama for taking him at fair value. He said he was looking to buy a 2-person plumbing shop, one of the employees being him. He said it has income of $250,000-$280K. With two people, let's say he billed 80% of the hours. That leaves 3200 billable hours a year. Taking $250K over 3200, we get $78.13 of pure profit. Oddly enough, the typical plumber bills $75 an hour. I'm guessing he is thinking he is being taxed on his gross income rather than his net profit. Given a typical plumber nets $35,000, his employee should cost him about $70,000, between work comp etc. Add about $10,000 for office and office supplies, another $25,000 in vehicle deprecation, insurance, and fuel, and he is looking at a net profit of about $145K. I'm probably low balling his expenses though. If plumbers made $250K, everybody would be a plumber.<BR/><BR/>Here he is in another interview:<BR/><I>Eventually it would employ other people. Right now it’s a two man shop and it’s got a very good footprint and a very good reputation, so eventually I would want to put other people out there. I don’t want to get huge because if you get too big your quality goes, but I definitely wouldn’t mind having two good plumbers out there with me working. </I><BR/>http://familysecuritymatters.org/publications/id.1465/pub_detail.aspAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-3589378.post-1597403541930082432008-10-15T15:11:00.000-04:002008-10-15T15:11:00.000-04:00Then how does Joe Wurzelbacher put himself in that...Then how does Joe Wurzelbacher put himself in that category, and if you're right, why didn't Obama correct him, rather than launch into his redistribution theory?David L Alexanderhttps://www.blogger.com/profile/13871706129906941567noreply@blogger.comtag:blogger.com,1999:blog-3589378.post-70907576234120689902008-10-15T15:04:00.000-04:002008-10-15T15:04:00.000-04:00In fact, they might start drinking overseas where ...<I>In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.</I><BR/><BR/>This is a proposition that seems straight forward enough, but you run into problems right away. Income isn't created ex nihilo. A doctor could very well move his practice to rural India, put he can't move his salary there. As we go down the line, we find there are quite a few things that can't be moved. Among the things that can be moved there are two ways to address the issue. The most common is tax where the income is produced. For example, if I do contract work in Illinois, I have to pay Illinois income tax on that work even though I live in Wisconsin. The second way is to tax the person where he resides. Needless to say, higher tax states prefer the former method.<BR/><BR/>The second thing that seems kind of odd is the claim of SB owners having income of over $250K. We aren't talking single proprietorships. Most likely they are using the IBM definition of a small business, under $250MM in revenue. This means we are definitely talking about some sort of incorporation structure, perhaps an S-Corp where income is passed down to the individual to be taxed. Perhaps the taxes force the taking of dividends, thus removing money from the business. Regardless, we aren't talking about Mom & Pop.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3589378.post-38060907093814223412008-10-15T14:22:00.000-04:002008-10-15T14:22:00.000-04:00"And what does the defense establishment have to d...<I>"And what does the defense establishment have to do with a sales tax's viability?"</I><BR/><BR/>It's simply a major portion of the federal burden, which the state does not have. Still, the premise behind a national sales tax is worth considering. I'm just wondering how much considering it's really getting.David L Alexanderhttps://www.blogger.com/profile/13871706129906941567noreply@blogger.comtag:blogger.com,1999:blog-3589378.post-23644740662054823112008-10-15T14:05:00.000-04:002008-10-15T14:05:00.000-04:00And what does the defense establishment have to do...And what does the defense establishment have to do with a sales tax's viability?<BR/><BR/>Nothing.<BR/><BR/>The sales tax (consumption tax) is easily the best plan insofar as it penalizes consumption, thus rewarding savings.<BR/><BR/>Unlike the flat tax, it does not favor the wealthy; and it's quite easy to collect.Dad29https://www.blogger.com/profile/08554276286736923821noreply@blogger.com