Thursday, October 23, 2008

Tax Prep for DUmmies

D's idea of relaxation is to kick back and skim Wikio. While there recently, he found DUmmie FUnnies, the simple and straightforward purpose of which is to repost some of the more outrageous fare from the posts and comboxes of Democratic Underground and the Daily Kos alongside snarky commentary and ridicule. It's a great formula, as material is never in short supply. DU and DK bloggers and readers post much that is laughable and and are such generators of conspiracy theories that if I could remember where my tinfoil hat image was I'd announce an award right now.

Many of DU and Kos's offerings would be funnier, however, if they didn't amount to attempts at personal destruction of ordinary people. The latest example of this has been the campaign to ruin an ordinary working-class schlub named Joe or Sam, depending on which party you support, who had the nerve to ask their preferred candidate a legitimate (if ultimately embarassing to the candidate) question. The poor guy was minding his own business when the candidate decided to waltz into his world for a bit of semi-scripted propaganda, but ugly things happen to those who upset the Obama apple cart.

The feeding frenzy was in full swing at DU if DUmmie FUnnies is any indicator. While pj-comix, the DUmmie FUnnies blogger had his own favorites among the allegations (and made hay of those) one jumped out at me that I thought warranted a bit more attention than it was given. I figured I'd pick up the rebound on that one, just to be neighborly, and have a little something to write about. After all, if we all tried to answer every cockamamie notion that crops up on the left-wingnut blogs, we'd never get anything else done. The comment as cited is below, omitting pj-comix's responses as I'm going in a different direction anyway:

On the first $250,000 you earn, your income tax goes up ZERO, NADA, ZILCH. Not one more thin dime
For every $1000 OVER $250,000 Obama will ask you to pay an extra $30 dollars in taxes. Not $30 time $250,000---just $30 for the $1000 OVER THE FIRST $250,000. That means if your income is $251,0000, you are asked for $30. THIRTY FREAKING DOLLARS FOR $1000. AND YOU ARE TOO DAMNED TIGHT TO PAY THAT?????
So, if you make $300,000 ($50,000 above the first $250,000) Obama is going to ask for $1500. FIFTEEN HUNDRED for FIFTY THOUSAND. AND YOU STILL GET THE 50% TAX CREDIT FOR SMALL BUSINESSES AND THE $3000 FOR EVERY NEW PLUMBER YOU HIRE, DUMB**S. WHAT THE H**L ARE YOU COMPLAINING ABOUT? So, if you make $300,000 ($50,000 above the first $250,000) Obama is going to ask for $1500. FIFTEEN HUNDRED for FIFTY THOUSAND. AND YOU STILL GET THE 50% TAX CREDIT FOR SMALL BUSINESSES AND THE $3000 FOR EVERY NEW PLUMBER YOU HIRE, DUMB**S. WHAT THE H**L ARE YOU COMPLAINING ABOUT?

Whoever this guy is, he (she?) yells worse than my father-in-law. And my father-in-law (who, incidentally, doesn't swear) at least has the excuse that he comes from the B.C. (before case) days of computing when everybody typed in all caps because that's how it read on screen anyway. But I digress.

Our lefty Louis Rukhuyser touts what I'm sure seems to him an absurdly small 3%, while conveniently ignoring (but for brief lip service) that Joe's already paying 25-33% as it is. The parable about straining out the gnat and swallowing the camel comes to mind.

Let's have a closer look at that camel, shall we? I used an online 2008 marginal tax rate calculator to work out my figures. Although it seems every detail of Joe the Plumber's adult life has been made fodder for public discussion, I don't know how many dependents he has, so I have run the numbers assuming he is single with one dependent (knowing that he has a son.) and including no deductions.

On the first $250,000 he earns, Joe's income is taxed at the average rate of 25.96% (Joe's projected business revenues would put him in the 33.00% marginal tax bracket.) In other words, he'll owe Uncle Sam $64,912. Not exactly chump change.

For every $1000 over $250,000 Obama will ask Joe to pay an extra $30 in taxes over and above that rate. So if his income is $251,000, he is asked for (asked for? y'mean he can say "no, thanks" and it's all cool?)$30 plus the plus the marginal tax rate on that extra thousand which is $65,242 to equal a total of $65,272. Not a big change, I realize--but he's already paying out plenty as it is.

If Joe's income is $300,000 he'll owe $81,412 to Uncle Sam plus the $1500 mentioned above to Uncle Barack. Total it all up and his tax burden is $82,912. Amazing, isn't it, how quickly $30 here and there can add up?

Now this is all pretty minimalist and doesn't factor in deductions or the contrivances of a good tax preparer, but it also doesn't factor in the fact that Joe the plumber was predicting potential revenues from his small business castle in the air and not his expected personal income from it. He's not going to walk away with $250 or $300K; an awful lot of that is going right back into the business. This introduces a myriad other variables into the equation. But add or dock a few thousand and Joe can still expect to pay a hefty tax bill even at $250K.

That 50% tax credit, by the way, is on health care costs, not the total tax burden; Joe the Plumber's savings would depend on the size of his staff (and he'd be buying the insurance.) The $3000 hiring credit might cover a paycheck or two depending on the hire's experience.

I couldn't find the credit on the small business plan posted at the Obama campagn site, by the way--I'm guessing that's a recent innovation. There was a $500 tax credit for all workers, including, we hope, Joe. Maybe Mrs. Joe, or the ex-Mrs. Joe, or Joe's significant other could go earring shopping with Michelle Obama when the check comes in.

[I noticed over last weekend that Iowahawk, taking a cue from Spartacus, launched the I Am Joe campaign in solidarity with ordinary folks who for some reason have failed to recognize the greatness of The One. I'd like to bring attention to this effort, and dedicate to it my recent attempts to get the shower faucet turned around so that the hot water doesn't come out when it's set to cold.

Seriously, though, we stand in solidarity with Joe here at the minor premise.]

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Blogger John Plabon said...

It is comprehensive and before TurboTax it took me a full week to prepareour taxreturns. WIth TurboTax it takes an evening.

10:09 PM  

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