$249,999.00 Is the Goal

[Ravi]

Care, Sole Ps don't operate under the same rules as scorps...but if Manu is operating his business as a Sole P, I'd be surprised...especially since he has employees. It would be a rather stupid arrangement.

 

[Immanuel]

Does raising taxes on the middle class or the lower classes do anything?

Or are those two classes just stuck with their higher tax rates if raised on them... and have no means to be a traitor and move all of their money to singapore while enjoying all the benefits that America has given them?

Care

I think what is going on here is that the Democrats are waging a class war. They are promising tax increases on the rich which really won't solve the problem in order to rally the troops behind them. They know it won't make a significant difference but by golly the poor who don't really think about the issue, hear that Democrats are going after the rich. That is all that is needed to keep the poor happy and voting for them every election.

Oh and don't forget the cigarette tax they did increase. Notice how they hid that tax increase on the poor? Had they increased the income tax on the poor they would have been clobbered for it, so instead they dropped it in one place that many people won't even realize it happened.

No, the poor are not stupid, but Democrats have been lieing to them forever. It just makes sense. If they stopped to think about it and got out of the class war mentality things would be different and the Democrats would be in panic mode.

Immie

 

[xsited1]

it's not class warfare...

taxes also went up on the middle and the poor with the added cigarette taxes he's adding to them ....but nooooooooo, that doesn't count because it is not income tax? Bulloney!

How many of the poor will be able to take advantage of the new car credit they are offering? near none, because even with the credit, they can't afford the new car....but the middle and the upper classes can take advantage of this credit....

...

So the middle and poor smoke cigarettes? So Obama is increasing the cigarette taxes to get back at the poor and middle class because they are the ones who smoke. That made me . Therefore, if the poor and middle class want to cut their taxes, they'll stop smoking. However, all the medical programs funded by tobacco taxes will go unfunded and tens of thousands will die. Oh, the horror!

Believe me, the 'poor' will take advantage of the new car credit. The poor will have no problem borrowing money for a new car. They'll have to pay a higher interest rate, but they'll buy that new car.

 

[American Horse]

well mustang,
4 scorp business owners in a row came on this thread or the other one about the same thing, that they DO NOT PAY SS/Fica taxes on their profit of the business in which they take as income, on their tax returns?

So what is it? Do they or do they not have to payy SS taxes on the money they take as profit and report as such on their income tax returns?

Of course scorp business owner do just as you said; I was raising the issue of Sole Proprietors. As a percentage of overall small business owners they are huge. As I said in an earlier post, people react to incentives, whether they perceive them correctly (like complicated tax policies) or not.

From Frequently Asked Questions of the SBA, in 2007 there were 27.2 million small businesses in the US. In 2005 Twenty one million of those were Sole Proprietorships. Regardless of the mix of years represented here that amounts to 77% of small business being SP's.

Tax policy and sole proprietorships: a closer look.
The businesses and self-employed individuals represented by the 21 million sole proprietorship forms filed with individuals' income tax returns for 2005 represent a wide variety of economic activity: mom and pop grocery stores; professional service providers; day care operators; the carpenter who is a true independent contractor and the homeless man with a few odd jobs forced to report as one; businesses with receipts ranging from $100 to $100 million; start-up enterprises that will go on to be wildly successful and others that will fail miserably.......

These opportunities to use sole proprietorships for diverse purposes have undoubtedly contributed to the increasing popularity of Schedule C's in recent decades. (1) Since 1980, the fraction of individuals filing a Schedule C increased by two-thirds, from one in ten to nearly one out of every six taxpayers ......

Taxpayer Compliance

According to the 2001 National Research Program (NRP), sole proprietorships are the biggest single contributor to the tax gap. (4) The NRP reported that nonfarm proprietors contributed $68 billion to the $197 billion individual income tax underreporting gap in 2001, plus an unspecified but undoubtedly large part of the $39 billion in self-employment tax gap. Sole proprietors have a high misreporting percentage as well as a large dollar amount of missing taxes (5) Next to farm income, nonfarm proprietor income registered the highest net misreporting percentage of any type of individual business income: 57 percent of net income that should have been reported was misreported.....

Just something to think about when we consider incentives. I think the biggest misconception of liberals is their inclination to ignore incentives. Perhaps that comes from believing their own necessary propaganda, no insult intended to liberals on this board; they just may need to reconsider incentives.

"Mustang"

...

 

[American Horse]

Care, Sole Ps don't operate under the same rules as scorps...but if Manu is operating his business as a Sole P, I'd be surprised...especially since he has employees. It would be a rather stupid arrangement.

Mind going into why that is so? (in relation to employees). Maybe a link or a paragraph or two so that it can be analyzed?

We do seem to be deep into tax policy and incentives here, so fleshing that out would be helpful.
....Manu should speak for himself.

 

[Care4all]

well mustang,
4 scorp business owners in a row came on this thread or the other one about the same thing, that they DO NOT PAY SS/Fica taxes on their profit of the business in which they take as income, on their tax returns?

So what is it? Do they or do they not have to payy SS taxes on the money they take as profit and report as such on their income tax returns?

Of course scorp business owner do just as you said; I was raising the issue of Sole Proprietors. As a percentage of overall small business owners they are huge. As I said in an earlier post, people react to incentives, whether they perceive them correctly (like complicated tax policies) or not.

From Frequently Asked Questions of the SBA, in 2007 there were 27.2 million small businesses in the US. In 2005 Twenty one million of those were Sole Proprietorships. Regardless of the mix of years represented here that amounts to 77% of small business being SP's.

Tax policy and sole proprietorships: a closer look.
The businesses and self-employed individuals represented by the 21 million sole proprietorship forms filed with individuals' income tax returns for 2005 represent a wide variety of economic activity: mom and pop grocery stores; professional service providers; day care operators; the carpenter who is a true independent contractor and the homeless man with a few odd jobs forced to report as one; businesses with receipts ranging from $100 to $100 million; start-up enterprises that will go on to be wildly successful and others that will fail miserably.......

These opportunities to use sole proprietorships for diverse purposes have undoubtedly contributed to the increasing popularity of Schedule C's in recent decades. (1) Since 1980, the fraction of individuals filing a Schedule C increased by two-thirds, from one in ten to nearly one out of every six taxpayers ......

Taxpayer Compliance

According to the 2001 National Research Program (NRP), sole proprietorships are the biggest single contributor to the tax gap. (4) The NRP reported that nonfarm proprietors contributed $68 billion to the $197 billion individual income tax underreporting gap in 2001, plus an unspecified but undoubtedly large part of the $39 billion in self-employment tax gap. Sole proprietors have a high misreporting percentage as well as a large dollar amount of missing taxes (5) Next to farm income, nonfarm proprietor income registered the highest net misreporting percentage of any type of individual business income: 57 percent of net income that should have been reported was misreported.....

Just something to think about when we consider incentives. I think the biggest misconception of liberals is their inclination to ignore incentives. Perhaps that comes from believing their own necessary propaganda, no insult intended to liberals on this board; they just may need to reconsider incentives.

"Mustang"

...

nonfarm proprietor income registered the highest net misreporting percentage of any type of individual business income: 57 percent of net income that should have been reported was misreported....

soooo 57% of some of the sole proprietor's income is MISREPORTED...which avoids taxes....

nice....too bad the working class earning a salary can not MISREPORT their income by 57% to avoid taxes...huh?

now, can;t a "sole proprietor" also be an S-corp or LLc etc....or is sole proprietor the name given to people that do not incorporate their business?

i find it hard to believe the 21 million sole proprietors do not incorporate to protect their own personal finances.....

so, to me, what i said above to manu, still stands correct....unless those 21 million have not incorporated, which i doubt....

i will try to find out...

Care

 

[Care4all]

okay, so sole proprietors are NOT scorps.... correct?

 

[Ravi]

Care, Sole Ps don't operate under the same rules as scorps...but if Manu is operating his business as a Sole P, I'd be surprised...especially since he has employees. It would be a rather stupid arrangement.

Mind going into why that is so? (in relation to employees). Maybe a link or a paragraph or two so that it can be analyzed?

We do seem to be deep into tax policy and incentives here, so fleshing that out would be helpful.
....Manu should speak for himself.

It just doesn't make good sense. Why expose yourself to losing your personal assets? And why not take advantage of tax breaks given to scorps...it isn't that difficult to incorporate. But after reading what you posted above it seems clear that the reason is that it is easier to live under the radar of the IRS if you're a Sole P. The incentive you've described is the incentive to be a tax cheat. Pretty funny. I hire a few people that are Sole Ps and over the years 50% of them have not bothered paying their taxes, according to the notices the IRS sends me.

 

[Ravi]

okay, so sole proprietors are NOT scorps.... correct?

Right. They are responsible for reporting their income to the IRS, including paying quarterly estimates in advance. They receive a standard deduction of 50% of FICA taxes, IIRC, where the scorp owner wouldn't pay FICA at all on income not taken as a salary.

 

[Care4all]

okay, so sole proprietors are NOT scorps.... correct?

Right. They are responsible for reporting their income to the IRS, including paying quarterly estimates in advance. They receive a standard deduction of 50% of FICA taxes, IIRC, where the scorp owner wouldn't pay FICA at all on income not taken as a salary.

thank you....

another question....

I remember once hearing that many senators and congressmen and even the Cheney's and the GWBush's were considered small business owners...manily because they reported income from books they or their wives have writen....and outside interests that produced income...outside of their main jobs....

have you heard this?

care

 

[Ravi]

okay, so sole proprietors are NOT scorps.... correct?

Right. They are responsible for reporting their income to the IRS, including paying quarterly estimates in advance. They receive a standard deduction of 50% of FICA taxes, IIRC, where the scorp owner wouldn't pay FICA at all on income not taken as a salary.

thank you....

another question....

I remember once hearing that many senators and congressmen and even the Cheney's and the GWBush's were considered small business owners...manily because they reported income from books they or their wives have writen....and outside interests that produced income...outside of their main jobs....

have you heard this?

care

They could be, it depends on how they set it up. But if the income they get is from books I imagine they wouldn't bother to incorporate.

btw, the way Sole Ps can get away with scamming the IRS...say you hire someone to repave your driveway for $5,000. You write them a check, but the IRS has no record of the transaction unless the Sole P reports it as income...So it's quite easy for a Sole P to underreport income on a regular basis. Especially if they get paid in cash and it never makes it to their bank account.

 

[WillowTree]

Does raising taxes on the middle class or the lower classes do anything?

Or are those two classes just stuck with their higher tax rates if raised on them... and have no means to be a traitor and move all of their money to singapore while enjoying all the benefits that America has given them?

Care

I think what is going on here is that the Democrats are waging a class war. They are promising tax increases on the rich which really won't solve the problem in order to rally the troops behind them. They know it won't make a significant difference but by golly the poor who don't really think about the issue, hear that Democrats are going after the rich. That is all that is needed to keep the poor happy and voting for them every election.

Oh and don't forget the cigarette tax they did increase. Notice how they hid that tax increase on the poor? Had they increased the income tax on the poor they would have been clobbered for it, so instead they dropped it in one place that many people won't even realize it happened.

No, the poor are not stupid, but Democrats have been lieing to them forever. It just makes sense. If they stopped to think about it and got out of the class war mentality things would be different and the Democrats would be in panic mode.

Immie

exactly,, out of one side of their mouths they spew,, it's not class war,, and on the other side they spew about the "evil rich" yep they do..take from those who earn and give it to those who don't,, that's class warfare..

 

[WillowTree]

the cigarette tax cannot be sold as a tax on the poor,, it's a tax on everybody that smokes, the poor were not target as the rich have been targeted so yes, it is class warfare.

 

[Ravi]

It's hard to imagine that sunseting Bush's tax cuts on income is class warfare. You'd think these people would be grateful for several years of paying less taxes.

 

[del]

Right. They are responsible for reporting their income to the IRS, including paying quarterly estimates in advance. They receive a standard deduction of 50% of FICA taxes, IIRC, where the scorp owner wouldn't pay FICA at all on income not taken as a salary.

thank you....

another question....

I remember once hearing that many senators and congressmen and even the Cheney's and the GWBush's were considered small business owners...manily because they reported income from books they or their wives have writen....and outside interests that produced income...outside of their main jobs....

have you heard this?

care

They could be, it depends on how they set it up. But if the income they get is from books I imagine they wouldn't bother to incorporate.

btw, the way Sole Ps can get away with scamming the IRS...say you hire someone to repave your driveway for $5,000. You write them a check, but the IRS has no record of the transaction unless the Sole P reports it as income...So it's quite easy for a Sole P to underreport income on a regular basis. Especially if they get paid in cash and it never makes it to their bank account.

so, your driveway is finally done?

yay!

 

[Ravi]

Nah, I threw that in to see if you were paying attention.

 

[del]

Nah, I threw that in to see if you were paying attention.

damn, i should have known better. $5k is pretty steep for a driveway done by illegals.

 

[xsited1]

It's hard to imagine that sunseting Bush's tax cuts on income is class warfare. You'd think these people would be grateful for several years of paying less taxes.

Who are "these people" you speak of?

 

[Immanuel]

the cigarette tax cannot be sold as a tax on the poor,, it's a tax on everybody that smokes, the poor were not target as the rich have been targeted so yes, it is class warfare.

I would have to disagree with this statement. The cigarette tax is a tax on all who smoke, yet it hurts the poor much more than it does the rich.

Also, he promised not to raise the tax rate on the poor one single dime. Yet, it was the first thing he did concerning tax policy. The poor were the targets of that increase, he just didn't want them to know it.

Immie

 

[Care4all]

the cigarette tax cannot be sold as a tax on the poor,, it's a tax on everybody that smokes, the poor were not target as the rich have been targeted so yes, it is class warfare.

although there are many in the middle class who also smoke, most smokers are in the lower income earners....

cigarette taxes are regressive taxes on the poor and the middle class, they pay more in these taxes than do the wealthiest.

same with liquor taxes and same with gas taxes....the middle and poorer pay more of these taxes on sheer numbers than the top 5%....

This is why our tax structure needs to be viewed ON THE WHOLE, and not at just the income tax level, which only accounts for 1/3 of the revenues collected to fund our yearly budget.