Anonymous asked in Politics & GovernmentOther - Politics & Government · 10 years ago

Is the GOP trying to blur the line between rich and poor to gain a Millionaire's Taxbreak?

The most common form the GOP argument takes is that if the millionaire's taxbreak is eliminated, that will hurt a lot of small businessmen.

OK let's examine that and see whether or not it's true.

Nobody, anywhere in American business, has more control over their adjusted gross income than the small businessman who can pay himself whatever he wants.

It's called the "owner's draw" -- that's the technical accounting name for what a small businessman pays himself. On the books it may appear as salary, particularly if the small business is an S Corporation or C corporation, but however it appears on the books, it is "owner's draw".

This means that if small businessmen want to pay the Bush Era low Tax rates, they can just adjust their owner's draw so they keep their AGI below 200K/year.

How can I make that more simple for you? -- the owner either pays himself more than 200K or not.

We don't need Albert Einstein to help us understand.

Let's try with an even simpler example.

Let X be an amount of money.

Then either X is more than 200K, or it's not more than 200K.

You see how easy that is, even in America where the schools have completely failed, most adults can grasp this basic arithmetic concept.

None of the current income tax proposals are about taxing wealth! So if a small businessman owns a business worth $100 Million, he's not going pay income taxes on anything other than his income -- what he pays himself -- the owner's draw, which as we have seen is either more than 200K/year or it is not.

From this it follows that the small businessman who pays himself 200K/year or less is in precisely the same position as the entire remainder of the middle class, some of whom will be employees, some will be persons who receive revenue from sources other than employment (like dividends, or interest, or royalties, or social security, or a pension, or an annuity, or license fees, or honoraria).

So what is the real meaning of the small businessman argument profferred by the GOP?

It means they are scallawags who argue in bad faith -- they are trash talking -- trying to kick up dust and confuse people. They think they can use the word "small" as in small business to garner populist sympathy for their utterly meretricious and specious argument.

What we are really talking about here is a person who chooses to pay himself more than $200K/year and yet with aggressive greediness and graspingness has now come forward wearing the clothing of the "small" businessman to say that he doesn't want the Bush Era tax rates to expire for him -- he wants to keep those low tax rates because he's just a "small" (teeny, tiny, nano-person sized, hardly there at all, need a microscope to see 'em) businessman.

The GOP wants to conflate the "small" businessman with the Billionaires -- with Lloyd Blankfein who pays himself $70 Million per year for the wonderful services he brings to mankind, and with David and Charles Koch, another couple of gems.

It's disinformation, it's crooked, and it's a preview of what the USA will be like when the Tea Baggers and the GOP take over the House.

These are not intellectually honest people. They are greedy people who want to create confusion so they can grab more money. Let's borrow $700 Billion from the Chinese so we can give these greedy people another tax break, and what the heck our kids and grandkids can pay it back -- they are not going to need schools and roads and hospitals and bridges, so they can devote their lives to paying back the debts we rack up so we can make life more comfortable for the billionaires (who own half the wealth, why shouldn't they own 3/4's of it or 9/10ths -- a tenth is probably good enough for the bottom 97% of Americans, who could probably live in cardboard boxes down by the river and eat popcorn and turnips, right?)

Gottta love the GOP for their rhetorical agitprop -- always ready take advantage of people who are not well educated -- W.C. Fields had it right -- never give a sucker and even break -- confuse and abuse -- what else are they there for? Exploit and Dispose of -- like the ladies at the Triangle Shirt Waist Company -- like Kleenex.


A small business does indeed pay taxes on its profits. But those taxes are paid by the business -- the owner writes the check -- but the business, not the owner, is paying the taxes.

Once taxes are paid by the business on its profits, the rest of the bottom line is available to be carried as retained capital, and it can be invested later in business projects or just used as working capital.

The business is one thing. The owner is another.

If the business makes no profit, it pays no taxes.

If the business makes enough profit that the owner can draw 200K/year as compensation, then whining about the fact that the business is profitable as has to pay taxes on its net profits is just greedy.

I have never heard a genuine authentic small business owner do such whining, and I've been one myself. The whining is done by the millionaires who want to conflate themselves with "small" business for the greater confusion of the electorate and the politicians. Profit is Good, be happy!

6 Answers

  • 10 years ago
    Favorite Answer

    Dear Dolphin3,

    I agree with you--the GOP is deliberately and dishonestly trying to blur the line and make it sound as if small businesses will be hurt if the 'millionaire tax break' is eliminated--just as the GOP has thrown up barriers against all attempts Obama has made to correct or improve the devastating problems the US is facing.

    It's all about politics. It's all about making Obama and the democrats look as bad as possible so that at election time hard-core Republicans can tell the voters, "You see what bad shape the US is in? It's the democrats' fault. You should have listened to us Republican leaders." Never mind that the FISCAL year falls on a different day, and that once you realize that it's clear that it was the BUSH administration and its Republicans that has gotten us so deeply into debt. The Republican leaders are consciously and deliberately lying about what's in the best interests of US citizens, just so they can serve their own best financial interests and get themselves back in office. It's shameful.

    But truth is, if we DID follow the Republicans' advice then we'd CONTINUE to be STUCK in the EVER-ESCALATING NATIONAL DEBT--and that's the WORST thing that could happen to the US!

    The US has to take responsibility for paying off its debts. It has to start somewhere. Small businesses will NOT be hurt by Obama's tax plan--in fact, middle class Americans will be paying LESS taxes under Obama than they paid during the Bush administration!

    But it doesn't serve our Republican leaders well to have the "Democrats look good" because then THEY, the Republicans, would be less likely to be elected or re-elected. So better to ALWAYS paint the opposition black, even if they are serving our nation well.

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  • 10 years ago

    We could look to the first answer for Badger and see part of it.. God even speaks of it.. the Dumbocraps desire others money.. They do not want to work for it as others.. they just want it as a government gift! Ok,, not always true.. but with many it is.. that is why tax and spend. whose money do they take; the poor! They say they are for us.. I am poor.. but they do nothing.. they lie more than anyone on the planet! Look at Michigan.. they lied to workers.. through unions and others.. work sent to Mexico and COMMUNIST China.. where was the union and where was those voted for to keep jobs? We may remember that Nixon was not honored as a Republican after his drug actuated meeting with China!

    I am a devout Democrat.. but I am a REAL Democrat! The absolute commitment to Socialism that we see with Dumbocraps of our time shows they are not real Democrats.. they are basically Communists! This is proved by their denial of supporting the oath they take when they accept office!

    Your Bill of Rights.. is always attacked by them.. all it takes is money from others.. yet they are for the poor? They are suppose to be for all Americans.. I mean the first thing is to keep our freedoms.. all of them..If you want porn and a divorce.. they have your vote! If you want to support marriage... GOOD LUCK.. they will fight you always! I know.. I think I have lost mine. and it may lead to a law suite..they make you wait over a year.. then the law says you are legally separated.. is that not anti-male/female marriage? That is our own immigration.. maybe us men should go gay and the wives do the same?

    Why do you support those against the poor? It must mean you are not! Maybe you cannot support a marriage to another because you are too selfish? You need to look at facts because what you say means you are totally ignorant and maybe well to do! I am poor.. give me some of it.. wicked! comingsoon

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  • sprcpt
    Lv 6
    10 years ago

    yes and no

    Sure you can adjust the owner draw all you want to make the owner fall under the 250k line

    but a small business must pay taxes on its profits as well at an individual rate thus the busyness suffers the tax hike causing it not to be able to higher more employees or reinvest its profits into the busyness in order for it to grow.

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  • 10 years ago

    Have you ever been a small business person? Have you ever payed small business taxes? You do realize that small business taxes are payed at the individual rate right? And that you pay taxes not just on salary but on profits as well? You also have to pay the entire amount of SSI etc. Why do you on the left want my money? Why do you constantly push class warfare?

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  • Anonymous
    10 years ago

    Bringing successful people down to your level in life will not solve your problems.

    Only you can improve your miserable life - you do realize this, don't you?

    Your hatred and envy of wealthy people will not improve your life - it will only waste your time and give you an ulcer.

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  • 10 years ago

    What is it with you Lefties and your burning need to get your filthy hands on other people's money?

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