So you make over $250.000 per year

[Chris A]

Ok when Obama eliminates the bush tax cuts and goes after people that make over $250.000 and with the new proposition in California that taxes people that make over $250.000 a year most are at a effective rate of 72% for taxes...

I know a guy that owns a heating and air company. Has 15 people working for him but often puts in 16 hour days to keep costs down. His profits last year were about $270.000. Under the new tax laws his take home would be about $75.000 a year. He just told me. A whole bunch of stuff but honestly some well paid professionals are going to be out of work.

 

[bozack]

it will be interesting to see if they hold true to that....

I know many on the left would love to start hitting people making 250K/year harder, but then again I also know many on the left personally who make more than that who also do anything and everything to shelter their own money....

All we can do now is wait and see.

 

[Farang]

I haven't made $250k/year, but I wish net worth could somehow be factored into this. One year I do hope to make that much as a small businessperson, but the thing my income history would start to become VERY imbalanced. Like if I made $250k this year, I'd take next year off, and then do it again the year after or whatever to keep a steady income over the long term at around $70k. Once I owned a place to live, balance it out to $50k/year. But then I'm taxed like I make $250k every year

 

[RabidMongoose]

Did people not work enough to earn $250k when Clinton was in office?

 

[DAGTA]

How was 72% calculated?

 

[Chris A]

Did people not work enough to earn $250k when Clinton was in office?

Gas was cheaper. Workmans comp cheaper. Unimployment ins, countless other things. Even registering his 14 trucks was a lot cheaper. Add on all the regulatory bs of freon and licenses. Permits tons of crap added on. Then to take 72% of your income???

 

[mchammer187]

Ok when Obama eliminates the bush tax cuts and goes after people that make over $250.000 and with the new proposition in California that taxes people that make over $250.000 a year most are at a effective rate of 72% for taxes...

I know a guy that owns a heating and air company. Has 15 people working for him but often puts in 16 hour days to keep costs down. His profits last year were about $270.000. Under the new tax laws his take home would be about $75.000 a year. He just told me. A whole bunch of stuff but honestly some well paid professionals are going to be out of work.

I don't really see how that is possible

Prop 30 increases the marginal Tax income of people making 250K

so only 20K would be affected by Prop 30 and it only increases it by 1% for income between 250K and 300K the increase under prop 30 is not that bad but the way income tax rates are setup in CA are atrocious

so 1% 20,000 = $200 tax increase for someone that makes 270,000 a year

Granted he would already be paying 25.1K in state taxes already which is high as crap

 

[Chris A]

How was 72% calculated?

Good question but he added it all up. License fees. Income taxes. Fuel taxes. SS. Disability , workmanship comp and just taxes on his income

 

[thraashman]

Ok when Obama eliminates the bush tax cuts and goes after people that make over $250.000 and with the new proposition in California that taxes people that make over $250.000 a year most are at a effective rate of 72% for taxes...

I know a guy that owns a heating and air company. Has 15 people working for him but often puts in 16 hour days to keep costs down. His profits last year were about $270.000. Under the new tax laws his take home would be about $75.000 a year. He just told me. A whole bunch of stuff but honestly some well paid professionals are going to be out of work.

Well this "guy you know" is either bad at math or lying. The rate increase proposed by Obama on high income earners would set the top marginal tax rate to 39%. The new Califorina law would increase state taxes for the $250k level at 10.3%, and even adding in payroll tax and medicare (remember payroll tax has a cap around 100k), he would still take home in the vicinity of $105k after all taxes. And that's assuming zero deductions which as a small business owner he'd likely have quite a few.

 

[thujone]

Good question but he added it all up. License fees. Income taxes. Fuel taxes. SS. Disability , workmanship comp and just taxes on his income

well there's your problem... he paid income taxes twice

 

[Rainsford]

Good question but he added it all up. License fees. Income taxes. Fuel taxes. SS. Disability , workmanship comp and just taxes on his income

So what was it before? However you count, the complaint implies that his effective tax rate is going way up. Whether or not his math is sound (and I'd bet dollars to donuts it's not), presenting a number all by itself doesn't mean much.

 

[mchammer187]

Gas was cheaper. Workmans comp cheaper. Unimployment ins, countless other things. Even registering his 14 trucks was a lot cheaper. Add on all the regulatory bs of freon and licenses. Permits tons of crap added on. Then to take 72% of your income???

Wouldn't all those things not count against profit because they are expenses.

Profit = Revenue - Expenses.

250K Profit and 250K revenue are 2 different things and a Business with 15 workers I'd expect to have a lot more revenue than 250,000

 

[jackstar7]

Did people not work enough to earn $250k when Clinton was in office?

The rich were so poor back then, bro.

 

[thraashman]

Wouldn't all those things not count against profit because they are expenses.

Profit = Revenue - Expenses.

250K Profit and 250K revenue are 2 different things and a Business with 15 workers I'd expect to have a lot more revenue than 250,000

This is correct. Operating costs of a business do not count towards profit thus do not count as income for it. So either his income is lower and thus his tax bracket would drop, or all those fees are subtracted prior to his profit and he has a higher profit. Either way this guy needs to spend a couple hours reading up on how to better do his taxes because he apparently intends to pay tens of thousands more than he owes.

 

[Chris A]

http://www.justfacts.com/taxes.asp

Add in all the other fees of running a place.

 

[RabidMongoose]

Gas was cheaper. Workmans comp cheaper. Unimployment ins, countless other things. Even registering his 14 trucks was a lot cheaper. Add on all the regulatory bs of freon and licenses. Permits tons of crap added on. Then to take 72% of your income???

Some things were expensive back in Clinton times, too. People worked. I'm not sure if a change to Clinton era tax rates is going to be that significant for people earning $250k. I am close to 200k in CA and it would have no impact on my own motivation.

 

[Chris A]

From that link. • "Far less consensus exists about how to allocate corporate income taxes," but CBO estimates that 75% is borne by owners/stockholders, and 25% falls on workers.[28] [29] [30]

 

[shira]

I don't really see how that is possible

Prop 30 increases the marginal Tax income of people making 250K

so only 20K would be affected by Prop 30 and it only increases it by 1% for income between 250K and 300K the increase under prop 30 is not that bad but the way income tax rates are setup in CA are atrocious

so 1% 20,000 = $200 tax increase for someone that makes 270,000 a year

Granted he would already be paying 25.1K in state taxes already which is high as crap

And for married filing jointly, the threshold for the increased marginal rates is $500,000, so if the "guy" is married, he's not going to see any increase in CA income tax.

http://vig.cdn.sos.ca.gov/2012/general/pdf/30-title-summ-analysis.pdf

See page 13.

Furthermore, on $250,000 of taxable income, the marginal federal rates would increase about 3 percentage points if the Bush tax cuts are allowed to expire. And since state income tax is deductible, the marginal rate - CA + federal - on the last dollar of taxable income would be about 42% (increase from 39%). This is hardly going to break the bank.

 

[Rainsford]

From that link. • "Far less consensus exists about how to allocate corporate income taxes," but CBO estimates that 75% is borne by owners/stockholders, and 25% falls on workers.[28] [29] [30]

That is a meaningless number because it doesn't say anything about who earns what share of the income. It also has nothing to do with what you're talking about in this thread as far as I can tell...

 

[First]

Huh? The increase in the CA state tax on >$250K incomes (but below $300K) amounts to 1% of total income, from 9.3% to 10.3%, as a result of Prop 30. Combined with what we all assume will happen at the federal level, i.e. an uptick from 35% to 39.6% federally for $250K earners, that's a total of 5.6% (depending on deductions and all that complicated crap). So for him to go from $250K to $75K defies simple arithmetic.

 

[Chris A]

From bob brinker. http://bobbrinkerfanclub.blogspot.com/2012/10/california-income-tax-rate-proposition.html?m=1


Hey if I'm wrong I'm wrong no axe to grind!!! At the end of the day I learn stuff and open my mind. No partisan crap here if I go there slap me!!

 

[First]

Good question but he added it all up. License fees. Income taxes. Fuel taxes. SS. Disability , workmanship comp and just taxes on his income

This is the new reality of doing business in an industrialized economy, and none of it is "burdensome" to the extent you're making it out to be. Everyone is dealing with the same burdens if you're a small business, so it's relative to that playing field. Unfortunately, it's not so level if you're a large corp, but that needs to be changed and is a whole other discussion entirely, having nothing to do with increasing taxes or regulation. That's just an issue of fairness.

 

[shira]

Huh? The increase in the CA state tax on >$250K incomes (but below $300K) amounts to 1% of total income, from 9.3% to 10.3%, as a result of Prop 30. Combined with what we all assume will happen at the federal level, i.e. an uptick from 35% to 39.6% federally for $250K earners, that's a total of 5.6% (depending on deductions and all that complicated crap). So for him to go from $250K to $75K defies simple arithmetic.

The 39.6% rate applies to taxable income above $388,000, not $250,000.

But you're correct that this claim that the "guy"'s after-tax income would be $75k is just nonsense.

 

[Chris A]

This is the new reality of doing business in an industrialized economy, and none of it is "burdensome" to the extent you're making it out to be. Everyone is dealing with the same burdens if you're a small business, so it's relative to that playing field. Unfortunately, it's not so level if you're a large corp, but that needs to be changed and is a whole other discussion entirely, having nothing to do with increasing taxes or regulation. That's just an issue of fairness.

Good post as with many others!!!

Thanks for shareing. I was alarmed by his statements. I don't own a business but often thought about it. My expertise is automation and electrical.

 

[dawheat]

Ok when Obama eliminates the bush tax cuts and goes after people that make over $250.000 and with the new proposition in California that taxes people that make over $250.000 a year most are at a effective rate of 72% for taxes...

I know a guy that owns a heating and air company. Has 15 people working for him but often puts in 16 hour days to keep costs down. His profits last year were about $270.000. Under the new tax laws his take home would be about $75.000 a year. He just told me. A whole bunch of stuff but honestly some well paid professionals are going to be out of work.

First, like everyone said his numbers are BS. Licenses, workmans comp, etc are taken out of revenue, so his true 'profit' to which federal income and state taxes would be calculated
is closer to $125K (if his take home of $75K is true). So NEITHER the increase in federal or CA income taxes would apply to him as he doesn't fall in the top brackets.

Just for the sake of argument, if his true 'profit' is $270,000 without any other deductions (so give or take $160K take home), then his combined 2013 federal and CA income tax increase would be $2072 or $172/month.

With normal deductions, this number is going to be lower.

For sure this is not trivial, but he's full of shit.