The Profoundly Screwed-Up Beliefs That Compose Mitt Romney's Economic Ideology

[mawilson 2,133]

I doubt if he or you has ever worked for a small business then. A lot have only 2 or 3 workers and that means the owner is working 16 hours a day. Even if demand isn't going up they would still want to hire to take the load off.

Assuming they had a load to take off to begin with. If the store is empty 16 hours a day,

they wouldn't be hiring more people to do nothing.

For the record, I am a small business owner and will be starting a new business within 2-3 months.

[Dan J 277]

I doubt if he or you has ever worked for a small business then. A lot have only 2 or 3 workers and that means the owner is working 16 hours a day. Even if demand isn't going up they would still want to hire to take the load off. These business are the backbone of our economy, the mom and pop stores that are always being talked about when the subject of Walmart comes up. Raising their taxes does have the effect of hurting them and lowering their taxes without any doubt will at least allow them to continue to have a business. So while in some instances it doesn't mean more jobs but it does mean more jobs wouldn't be lost.

I have mostly worked for small business. The owners often work long hours not because they absolutely have to, but more because they are personally vested in it. They could often afford to hire, but won't since it will take away from their income.

Business are taxed on profit, not revenue. For a small business, its what the owner takes as income. If they are continuously reinvesting the profit they make in the company hiring people and all that, they wont pay as much in taxes.

Businesses require capital. The more the government continues to suck up that capital in the form of taxes and the cost of compliance with mandated programs, the less capital a business has to invest toward making a profit. By investment, I mean new hires, equipment purchases, sales campaigns, et cetera. If as a small businessman all I am concerned with is keeping my head above water, I am not going to do anything but sit on my assets.

There is ALOT of Capital out there. But not many investors willing to take a risk in the current economy.

[I AM NOT THAT GUY 5,715]

Assuming they had a load to take off to begin with. If the store is empty 16 hours a day,

they wouldn't be hiring more people to do nothing.

For the record, I am a small business owner and will be starting a new business within 2-3 months.

Are you going in with cash, or are you going in with a line of credit?

That is something else that is happening in hard times: Businesses are paying down their credit lines and loans despite the low interest rates, to limit their exposure to higher rates and tight credit later on. That means, no major capital purchases in the foreseeable future for many businesses.

[JohnSmith2007 353]

Assuming they had a load to take off to begin with. If the store is empty 16 hours a day,

they wouldn't be hiring more people to do nothing.

For the record, I am a small business owner and will be starting a new business within 2-3 months.

Yeah, I thought better of including you in that statement after it was to late to change it. I am not talking about a business that is failing (empty 16 hours a day) I am talking about main street USA business that could make it if the government stops acting as if they are the nations piggy bank.

[JohnSmith2007 353]

I have mostly worked for small business. The owners often work long hours not because they absolutely have to, but more because they are personally vested in it. They could often afford to hire, but won't since it will take away from their income.

Business are taxed on profit, not revenue. For a small business, its what the owner takes as income. If they are continuously reinvesting the profit they make in the company hiring people and all that, they wont pay as much in taxes.

I have worked most of my life in a small business. Most of them would be hurt by higher taxes and helped by lower taxes. These are the business that employ most of America. So higher taxes hurt employment and lower taxes help employment.

[Dan J 277]

Yeah, I thought better of including you in that statement after it was to late to change it. I am not talking about a business that is failing (empty 16 hours a day) I am talking about main street USA business that could make it if the government stops acting as if they are the nations piggy bank.

If the business can't make it, taxes are probably not the reason and changing it is not going to save them. Not every business is going to survive this current economy. Especially those related to housing or real-estate.

There are a lot of reasons businesses fail, and it rarely involves taxes. If anything lower taxes would only push off the inevitable.

[I AM NOT THAT GUY 5,715]

I have mostly worked for small business. The owners often work long hours not because they absolutely have to, but more because they are personally vested in it. They could often afford to hire, but won't since it will take away from their income.

Business are taxed on profit, not revenue. For a small business, its what the owner takes as income. If they are continuously reinvesting the profit they make in the company hiring people and all that, they wont pay as much in taxes.

There is ALOT of Capital out there. But not many investors willing to take a risk in the current economy.

One reason they are not willing to take the risk in this current environment, is there is little certainty of how big a chunk the government is going to suck up on the return. If I am playing with a 35% return on an investment and the current tax liability is around 25%, I can put 10% in my pocket. But is the government turns around next year, and puts a 10% surcharge on everything, I just left my balls hanging out in the wind for nothing.

[Dan J 277]

One reason they are not willing to take the risk in this current environment, is there is little certainty of how big a chunk the government is going to suck up on the return. If I am playing with a 35% return on an investment and the current tax liability is around 25%, I can put 10% in my pocket. But is the government turns around next year, and puts a 10% surcharge on everything, I just left my balls hanging out in the wind for nothing.

Your math is off.

If you have money to invest, you have already paid taxes on that money, depending how you got it. If you are turning around and investing that money, you pay taxes on what you gained out of the investment, not the entire investment amount.

So 25& tax does not mean you are only left with a 10% total return, it means you have a 26.25% of a return on your investment (after taxes). The only way you would loose all of your return is if the tax rate was at 100%.

The bigger risk is loosing everything.

[I AM NOT THAT GUY 5,715]

Your math is off.

If you have money to invest, you have already paid taxes on that money, depending how you got it. If you are turning around and investing that money, you pay taxes on what you gained out of the investment, not the entire investment amount.

So 25& tax does not mean you are only left with a 10% total return, it means you have a 26.25% of a return on your investment (after taxes). The only way you would loose all of your return is if the tax rate was at 100%.

The bigger risk is loosing everything.

The numbers were for demonstration purposes. The actual marginal rate for a sole proprietor at the top end is currently 50.3% just for the feds.

Every time you make a gain on an investment, that gain is taxable, if not as income, then as a capital gain.

Edited August 26, 2010 by ##########

[Gary and Alla 3,694]

This amounts to "he is screwed up because he disagrees with Obama" Big deal.

I think he is screwed up because he wants to keep an income tax at all. You see what happens when people have a"tax break" for buying homes and when there isn't a tax break for buying homes (ELBuscador, where is your good economic news this week?) Imagine if there just was NO income tax.

[웃 910]

Here are the main points:

– eliminate taxes on capital gains and interest for households earning less than $250,000 a year

[lostinblue 1,989]

http://www.rense.com/general91/esd.htm

Three Devastating Tax

Waves Will Destroy Many

From Americans for Tax Reform

8-23-10

In just six months, on January 1, 2011, the largest tax hikes in the history of America will take effect.

They will hit families and small businesses in three great waves.

On January 1, 2011, here's what happens... (read it to the end, so you see all three waves)...

First Wave

Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011.

Personal Income Tax Rates Will Rise

The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed).

The lowest rate will rise from 10 to 15 percent.

All the rates in between will also rise.

Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as highermarginal tax rates.

The full list of marginal rate hikes is below:

The 10%

bracket rises to an expanded 15%

The 25%

bracket rises to 28%

The 28%

bracket rises to 31%

The 33%

bracket rises to 36%

The 35%

bracket rises to 39.6%

Higher Taxes On Marriage And Family

The "marriage penalty" (narrower tax brackets for married couples) will return from the first dollar of income.

The child tax credit will be cut in half from $1000 to $500 per child.

The standard deduction will no longer be doubled for married couples relative to the single level.

The dependent care and adoption tax credits will be cut.

The Return Of The Death Tax

This year only, there is no death tax. (It's a quirk!) For those dying on or after January 1, 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes, a business, a retirement account, could easily pass along a death tax bill to their loved ones. Think of the farmers who don't make much money, but their land, which they purchased years ago with after-tax dollars, is now worth a lot of money. Their children will have to sell the farm, which may be their livelihood, just to pay the estate tax if they don't have the cash sitting around to pay the tax.

Think about your own family's assets. Maybe your family owns real estate, or a business that doesn't make much money, but the building and equipment are worth $1 million. Upon their death, you can inherit the $1 million business tax free, but if they own a home, stock, cash worth $500K on top of the $1 million business, then you will owe the government $275,000 cash! That's 55% of the value of the assets over $1 million! Do you have that kind of cash sitting around waiting to pay the estate tax?

Higher Tax Rates On Savers And Investors

The capital gains tax will rise from 15 percent this year to 20 percent in 2011.

The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.

These rates will rise another 3.8 percent in 2013.

The Second Wave

Obamacare

There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:

The "Medicine Cabinet Tax"

Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

The "Special Needs Kids Tax"

This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.

There are thousands of families with special needs children in the United States , and many of them use FSAs to pay for special needs education.

Tuitiion rates at one leading school that teaches special needs children in Washington , D.C. ( National Child Research Center ) can easily exceed $14,000 per year.

Under tax rules, FSA dollars can not be used to pay for this type of special needs education.

The HSA (Health Savings Account) Withdrawal Tax Hike.

This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 0 percent, disadvantaging them relative to IRAsand other tax-advantaged accounts, which remain at 10 percent.

The Third Wave

The Alternative Minimum Tax (AMT) and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they'll be in for a nasty surprise-the AMT won't be held harmless, and many tax relief provisions will have expired.

The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year.

According to the left-leaning Tax Policy Center , Congress' failure to index the AMT will lead to an explosion of AMT taxpaying families-rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.

Small business 'expensing' will be slashed and 50% expensing will disappear.

Small businesses can normally 'expense' (deduct) rather than slowly-deduct or 'depreciate' equipment purchases up to $250,000.

The traditional $250,000 figure will be cut all the way down to $25,000!

Larger businesses can currently expense half of their purchases of equipment. In January of 2011, ALL of it will have to be "depreciated." (The depreciation period over which a business must write off a major expense is often THIRTY YEARS.)

Taxes will be raised on all types of businesses

There are literally scores of tax hikes on business that will take place. The biggest is the loss of the "research and experimentation tax credit," but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced

Teachers will no longer be able to deduct classroom expenses.

Coverdell Education Savings Accounts will be cut.

Employer-provided educational assistance is curtailed.

The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed

Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA.

This contribution also counts toward an annual "required minimum distribution." This ability will no longer be there.

PDF Version Read more:

And Worse Yet?

Now, your insurance will be INCOME on your W2's!

One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation . . . the dupes, er, dopes, who backed this administration will be astonished!

Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort.

If you're retired? So what... your gross will go up by the amount of insurance you get.

You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That's what you'll pay next year.

For many, it also puts you into a new higher bracket so it's even worse.

This is how the government is going to buy insurance for the15% that don't have insurance and it's only part of the tax increases.

Not believing this??? Here is a research of the summaries.....

On page 25 of 29: TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001, as modified by sec. 10901) Sec.9002 "requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income."

___________

Joan Pryde is the senior tax editor for the Kiplinger letters.

Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what is above.

[mawilson 2,133]

The actual marginal rate for a sole proprietor at the top end is currently 50.3% just for the feds.

How so? Explain.

The top fed rate is 35% for taxable income over $372,950.

[I AM NOT THAT GUY 5,715]

How so? Explain.

The top fed rate is 35% for taxable income over $372,950. ($186,825 filing separately)

Add the 15.3% self-employment tax on top of that. 35% + 15.3% = 50.3% Of course, you hit the cap @ $106,800, so yeah, I guess the real rate would be 35% + 2.9%, or 37.9%

Edited August 26, 2010 by ##########

[mawilson 2,133]

Add the 15.3% self-employment tax on top of that. 35% + 15.3% = 50.3% Of course, you hit the cap @ $106,800, so yeah, I guess the real rate would be 35% + 2.9%, or 37.9%

37.9 percent is correct for taxable income over $372,950 ($186,825 if filing separately.)