Taxes, Income, and President Obama's Socialist State
The press corps always has a love / hate relationship with any politician. The press does not care about policy - its main mission is to sell news to remain in business. How objective, and how much they care, is always governed by the questions asked - or not asked. The tax pledge that President Obama made that no one who makes less than $250,000 is going to be affected sounds VERY good - for anyone who does not own a business that is taxed through the 1040 as a PERSONAL business. If you are incorporated no problems, but the vast majority of small businesses run all income as personal income and thus through the 1040 long form with class C schedules - and every one of them WILL be affected by taxing people who make more than $250,000. This is not NET income, it is GROSS income - a BIG difference.
Oregon legislature is also looking to up the max income to 11% on all those making more than $250,000 a year - and you can be sure it is not what the papers reported as told to them by the people proposing the law. You can be sure - and NO newspaper is going to ask since they have the same political goal of redistributing the wealth and are themselves NOT affected by this - that the numbers told as being affected were individuals who worked for others earning $250,000 or more - not the small businesses that flow their income through their 1040.
The studies by University and "public interest" groups all tout that 1.9 to 2.7% of people make over $250,000 a year - roughly 6 million people. However, they look for people who WORK for others and / or lump them as part of small business income - like LLCs.
8% of all family farms earn more than $250,000 ( http://www.usda.gov/documents/FARM_FAMILY_INCOME.pdf ) who would be hit. Now the number of family farms is WAY less than the number of other family businesses.
The problem is trying to find out how many small businesses file as such through 1040 and the IRS does not seem to release those figures to the public - so everything is a guess. Based on various numbers sited at IRS, SMA, Census, around 17 million small businesses exist who have employees - and from that you can deduce that around 10 million gross more than $250,000 - who would be hit with higher taxes by the Federal as WELL as the state since all income flows through 1040. Remember, EVERYTHING that is being talked about is GROSS INCOME - not NET income after expenses. Nothing in 1040 states that you only pay taxes on your NET income after expenses for a person - limits, items that you can no longer deduct is ALWAYS based on GROSS income. Example, if you earn $100,000 a year and you send a kid to college the expenses are ALL deductible - other people are subsidizing your kid in college. If you make $160,000 or more NONE is deducible at ALL. You are now the ones subsidizing those earning less than you do. The same will be true for the Oregon and Federal upping on incomes more than $250,000.
Oregon has around 425,000 individual tax filers, of those 104114 had employees and if any business has more than 4 then their gross income will be over $250,000 on average. So that means roughly 60,000 small businesses will be hit by the new proposed Oregon tax hike rate to 11% for all people running a business as income on schedule C through their 1040 and Oregon taxes.
It seems that the government (all) are deliberately hiding the number of firms who file as personal income their business income in the US - you cannot find this data in any form on any site.
And NO reporters are asking for it - they are hiding the truth by avoiding the question.
posted by Tom Philo at 12:35 PM
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