LET'S TALK TAXES

The Republicans ought to be ashamed of themselves and they know better. How can they argue, with a straight face, against the plan to end the tax cut on individuals making more than $250,000.00 per year?

They claim that it hurts Small Businesses - the ones that create jobs and keep America running.. THEY KNOW THAT THE TAX CUTS ONLY HELP THE BIGGEST CORPORATIONS AND VERY WEALTHY INDIVIDUALS. Yes, they know better.

It's interesting who they have making those arguments: multi-millionaire Congressmen and people like Joe The Plumber - who we all know doesn't have a business. I have not seen any small business people making the argument because they know what the Congressmen know. SMALL BUSINESSES DON'T MAKE $250,000.00 per year. If they do, then they need another accountant and attorney. I will explain.

Businesses are taxed on their income left over after their business expenses.. So the magic $250,000.00 taxable income is what is left over. Here is why small businesses don't make $250,000.00 taxable income. Even if they Gross a lot of money, the trick is to spend it in such a way that its a tax deductible event to the business (reducing taxable income), and such that the business owner gets the benefit of it without being taxable income to him/her. It's all legal as long as you don't go crazy and do something like pay the light/phone bill at your house from business income and try to deduct it without claiming it as personal income.

Some good legal examples include: health/life insurance; the company car and all of its insurance, maintenance and repairs; business trips where you actually conduct business (but also sort of a mini family vacation). Sometimes they just happen to be at a nice resort. Another good example is college tuition for company officers and key employees or directors. OK- hire your kids in key positions or add them to the board of directors or make them Vice president of Whatever. They can consult on the telephone and work when they're home on break. Oh, you can put them on the payroll too - the same money you would have given them anyway. Finally, you can hire your spouse and add him/her to the payroll and file separate tax returns.

The spouse is a good one. Let me explain. Let's say that after all the deductions you can get, you still have $250,000.00 left over as taxable income and you file jointly as husband and wife. At 36% you would pay $90,000.00 in taxes. Now, lets split that and file separately with each spouse making $125,000.00 and dropping down to the 28% tax bracket. So now each spouse pays $35,000.00 in taxes for a total of $70,000.00 or a $20,000.00 savings. Out of the same $250,000.00, you can reduce the incomes even lower and therefore lower the tax bracket by adding the kids to the payroll.

Ideally you want spread out that $250K so that eventually its taxed at 15% for each person getting money. All the money comes in the same household, but at 15% instead of 36%. Ha! a savings of $52,500.00. That is a total of $250K broken down into small pieces. 250K x 15% = $37,500.00. Instead of $250,000.00 x 36% = $90,000.00. The savings is $52,500.00 . NOT BAD.

The only people who can't "fix" their income in this legal way are the very wealthy and the largest corporations. They just make too much money. And that's good; they just ought pay the taxes on that "over the top income".

Small businesses are not complaining because they know better; the Republicans know better, but they are trying to protect their wealthy contributors. So they recruit Joe who really doesn't know any better. The problem they all talk loud and a lot of other people just like Joe jump on the band wagon.

President Regan used to call them the "silent majority". I always called them the "ignorant majority". Not ignorant in a negative way; put simply, they just suffered from a lack of knowledge of what's really going on. They were and still are being used and don't even know it.

THANK GOD, FINALLY THEY ARE THE IGNORANT "MINORITY". Let's keep them in the minority.

BB