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Poor Joe


Pangloss
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Getting back to the topic of Joe, it occurs to me that this is a huge red herring. I know a few people who have run their own businesses. They incorporate them, so the money earned by the company is separate from what they earn (and, I assume, shields them from personal liability). What you need is a decent accountant.

 

One of these guys was explaining this to me recently. The goal for his personal income was to make very little money, and leverage the business and corporate tax laws as much as possible. Instead of having an income and then paying for things, you can have the company provide you with benefits, some of which are not taxable at all, and some of which have a lower tax burden. Business taxes are capped at 35%, and with various accounting tricks, the actual tax rate is often lower. That's where the big income is. Not with the individual.

 

So if Joe actually were average and were planning on buying the business, he probably still wouldn't run afoul of the $250k threshold for the higher taxes.

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How do you know he's not a subchapter S corp? It's my understanding that that's what most self-employed types do. You're thinking he's a C type because his income is high, i.e. to avoid higher taxes? If that's the case then wouldn't Obama's tax plan make sense, to avoid people dodging taxes by making that change?

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How do you know he's not a subchapter S corp? It's my understanding that that's what most self-employed types do. You're thinking he's a C type because his income is high, i.e. to avoid higher taxes? If that's the case then wouldn't Obama's tax plan make sense, to avoid people dodging taxes by making that change?

 

I have no idea. I have no familiarity with this kind of detail.

 

But if he's self-employed, he needs to charge at least $125 an hour for this to be an issue (assuming 2000 hours worked) Plumbers seem to fall a little short of that.

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