CNBC's Bartiromo falsely suggested Obama proposed taxing small businesses' revenue
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SUMMARY: In claiming that "small businesses ... are putting $250,000 in revenue out there, and they're going to get impacted" under President Obama's proposal to let the Bush tax cuts on wealthy taxpayers expire, CNBC's Maria Bartiromo falsely suggested that Obama has proposed taxing small business revenue. In fact, Obama has proposed raising marginal income tax rates and reducing income tax deductions for individuals earning more than $200,000 per year and for couples earning more than $250,000 per year.
During the February 26 edition of MSNBC's Morning Joe, CNBC host Maria Bartiromo asserted that among the "unintended consequences" of President Obama's proposal to let the Bush tax cuts on wealthy taxpayers expire is that "the bottom line is small businesses ... are putting $250,000 in revenue out there, and they're going to get impacted, and this is the single largest creator of jobs." But her suggestion that Obama has proposed taxing small business revenue is false. In fact, Obama has proposed raising marginal income tax rates and reducing income tax deductions for individuals earning more than $200,000 per year and for couples earning more than $250,000 per year. Moreover, Bartiromo's suggestion that doing so would be a tax increase for most small businesses is also false: as Media Matters for America documented, according to the Tax Policy Center's table of 2007 tax returns that reported small business income, 481,000 of those returns -- about 2 percent -- are in the top two income tax brackets, which include all filers with taxable incomes that would be affected.
Bartiromo's suggestion that Obama's proposal would tax the revenues of small business owners advances a false talking point from the 2008 campaign about then-Sen. Obama's proposal to increase taxes on those making more than $250,000. As Media Matters documented, Sen. John McCain falsely claimed that "[i]f you are one of the 23 million small business owners in America who files as an individual rate payer, Senator Obama is going to raise your tax rates."
From the February 26 edition of MSNBC's Morning Joe:
WILLIE GEIST (co-host): We're just getting a report that the forecast deficit for $1.75 trillion -- that's 12 percent of GDP, the largest since World War II. And Maria, you have some concerns.
BARTIROMO: Well, I think that it is extraordinary that we are talking about raising taxes in this severe, severe environment. You know, I think Andrea is right by saying people are willing to pay taxes. They recognize that this is an extraordinary moment in time. Having said that, there are such unintended consequences in this.
First of all, charitable contributions, get ready for those to go off a cliff because you are not going to get the tax write-off that you got in terms of, you know, charitable contributions. The next thing: $250,000. Look, the bottom line is small businesses, you know, are putting $250,000 in revenue out there, and they're going to get impacted -- and this is the single largest creator of jobs.
People that earn that kind of money deserve to pay their fair share. They can afford to give back to the people who work what they have already taken from us.
Too many of those people have bought into the myth that they got where they are strictly on their own, and that taxes are "punishing their success".
They forget that they would never have achieved such greatness without all the "little people" who buy their product or work in their company. I know there are some professions that never come into direct contact with the great unwashed masses, like corporate lawyers, etc., but the food chain always leads back to the average consumer at some point.
What they also forget is the incredible amount of infrastructure which makes their commerce possible and the publicly educated workforce from which they draw upon to build their empires.
Exactly. Not to mention the whole legal framework which protects them from fraud, copyrights or patents their ideas, enforces contracts, maintains a peaceful environment in which to operate.... all of which is provided by that evil government they so despise.
Accounting 101 - REVENUE is never taxed. never had been, never will be. PROFIT (annother way of saying INCOME) is what's taxed. If you don't know the difference then you have no place debating tax policy OR owning a business.
You sure can learn a lot by reading, huh?
(You con's should try reading history (tax law, economics, civics, ect...) instead of always trying to re-write it!)
This is Bartiromo’s sloppy, knee-jerk reaction to any and all tax issues regarding the most fortunate among us, she being one of them. Highly paid personalities in the “liberal media” always show their true colors on issues that are sure affect their own pocketbooks.
Here we have Bartiromo lazily throwing around incorrect terminiology and ingenuously sympathizing with small businesses out of her own inner righteous anger about what could happen to her fat network paycheck. Many “liberal media” correspondents and anchors are millionaires who simply don’t empathize with those who live paycheck to paycheck, let alone those who struggle to succeed at small business.
actually, it's the marginal rate on taxable income, not be confused with either gross revenues or (in the case of individuals) gross profit. unfortunately, obama made the mistake of not being specific, thereby giving the republicans an opportunity to play to the rubes.
much like the estate tax (called the death tax by republicans), the proposal to let the earlier tax cuts die their predetermined death will have little, if any effect on most people. to listen to the right-wingnut screach machine, an uninformed person would reasonably assume their taxes will be going up, significantly, as a consequence of allowing the original bill's sunset provision to take effect as scheduled.
In Bartiromo's defense, she may have only been given the flash cards that told her that the Internal Revenue Service is where you pay your Income tax. That could be confusing, a lot of information to absorb all at once.
And if you did, wouldn't you INCORPRATE it, so that your paying coporate tax rates instead of personal income tax rates? Olbermann brought this up the other night. I haven't though through the logic of it completely (so if I get beat up by a con over this, I'll probably concede the point) but it seems that THIS may be why only 2% of "small businesses" are affected by this change to PERSONAL INCOME tax - the rest have all INCORPORATED, and pay CORPORATE tax rates.
I think the 2% figure also indicates that not many "small businesses" make that kind of money. It is entirely possible to run a successful small business and never show that kind of profit. If I ran a hot dog stand or a souvenir shop on the beach, and was able to pocket 100,000 a year, I would consider myself a HUGE success.
True, but let's say that... 20% of NEW businesses will end up making that kind of money at some point. The 2% figure tells me that the other 18% will incorporate and no longer really be cosindered "small businesses." (I'm assuming the definitin of "small business" would by any sole propriotroship, where the profits earned all acrue to the sole owner's (or partner's) personal income. A Corporation would thus never be considered as such. I suspect there's a bit of both going on in that 2% figure, but the Pub's don't want anyone to consider the Incorporation scenario because people are always more sympathetic to Joe the Pizza Parlor owner than they are to Corporations. They want to be the party of the little guy... as long as you're not TOO little to incorporate!
you would be assuming wrong.
their is no income test, for purposes of incorporating, and there are as many reasons for incorporating as there are types of corporations. the single most common reason for incorporating is to acquire the protection of the corporate veil, restricting your personal liability for acts of the corporation.
bear in mind, a corporation comes complete with the burden its own set of rules and regulations, as well as advantages. so the decision to incorporate is not predicated solely on the level of income.
Even more important, a good proportion of the people who are in that 2% are people who get only some of their income that gets them up to $250,000 in taxable income from a small business don't earn most of their money from that small business.
The people who are in this group file the form that the IRS requires for small businesses. Lots of people have a small business on the side, and get a salary from a regular employee while they make some money on the side. I know professors and many other professionals who earn a small amount of money consulting. I know others who sell a handmade product and make a small amount that way. There are countless ways that someone can be listed as a small biz filer but only make a small portion of their income via that small business.
These small businesses are incorporated. Most likely as S corps (or LLCs). Most large companies are C corps. S corp income is treated as personal income for the owners. There are two primary reasons to do this:
1. A single tax return.
2. Avoiding taxes in the event of a sale of the business. Because the income has been taxed all along, year by year, you can sell an S corp without paying income tax on the proceeds of the sale.
The TV talking heads are among the people that would see an increase yet they act as if they're looking out for small businesses.
Because it plays well to the Republican base. They can't very well admit that they're primarily defending their own luxurious lifestyles... it's more effective if they pretend to be looking out for the little mom and pop businesses out there.
That's why they were so quick to latch onto Joe the Plumber's bullsh*t story.
If we're punishing success by taxing it, we're also punishing non-success by taxing people just getting by--and the latter hurts an awful lot more than the former.
So deal with it.
The Social Darwinists absolutely refuse to concede that 10% tax on a $40,000 income is a bigger burden than a 25% tax on a $300,000 income.
Here's how I look at it:
Your [family's] 1st $50 K is needed to survive. Food, clothing, shelter (includes heat & electric) and enough transportation to get you to work to earn the salary in the first place.
The second $50K (I'm in the upper half of this group, just in the interest of full disclosure) is used for a little convenience and entertainment. The cable/Internet bill, dinner out (occasionally), movies, hobbies, Computer, maybe slighter better transportation.
The next $100K is where luxury begins. Bigger house, bigger car/SUV. Yearly vacation. Dinner out (weekly or more) Home theatre. Regular Golf outing.
The NEXT $150K is where REAL luxury begins. Really big house, Luxury car, Dinner out (almost nightly), Country Club membership.
Beyond that the luxry still increases (of course) but most of the money actually doesn't even get spent. It gets saved and invested. (And rarely invested in the way that creates jobs. I mean it buys stock. For those who don't understand - when you buy stock the comapny doesn't get the money - the previous owner of the stock does. Unless it's a new issuance (which happens very rarley) buying stock does not beneift the company in the least.)
Now given that model, how can ANYONE say that they need their LAST $50K as much as the need their FIRST $50K? Who says we shoudl tax the rich? Maslowe's Hierarchy of needs seems to support it. (So does Adam Smith, but don't tell a Con that or his head will explode.)
I agree. We are punishing non-success even more. If you total all types of taxes, the working poor are paying double the rate of the wealthy on the money they have left after survival-level expenses. The various taxes payed by the working poor are preventing them from getting health care. They are the only ones being "taxed to death." Taxes should be payed only by people who can afford to pay them.
Maria, Maria, Mariaaaaa,
You are wrong! Where did you get your info? Are you a college graduate? Do you know how to present a point by citing references to your assertions or are you a student of Fox News?
Media Matters for America documented, according to the Tax Policy Center's table of 2007 tax returns that reported small business income, 481,000 of those returns -- about 2 percent -- are in the top two income tax brackets, which include all filers with taxable incomes that would be affected.
2007 - Bush Tax Cuts for Small Business were in effect.
Yes, but once you take out many of deductions that a small business will use to get their tax burden lower will lose this advantage. Now a small business will come onto the radar and be taxed. The problem that most folks do not get, including MMFA is that many small business write off items of doing business including charity deductions (support soccer teams, baseball teams) to show what their real cost of business is, but once you can no longer use those as write offs, their income will increase and put them into the 250K. I guess MMFA forgot to document that part!!
They will find a way. Businesses always do to get write-offs
Markfoot,
You sound like you know which deductions Obama will eliminate and also how they will affect small businesses. That's pretty good.
Would you mind telling us in a little more detail? Maybe the number of small businesses with a tax increase will go from 2% to 2.2%.
I just sent Bartiromo an e-mail. How is it possible for a business journalist to not know the difference between income and revenue? I wonder if this woman has the slightest idea what she is talking about?
The tax increase would occur by reducing the benefit the wealthy get on tax deductions. As one example, taxpayers in the current top tax bracket of 35 percent would see their tax deduction for every $1 given to charity drop from 35 cents to 28 cents.
OH THE HORROR!!!! Seven cents on the dollar! This will be the end of America as we know it! OH MY GOD!!!! Load your guns, stock up on food and lock your doors!!!!! AAAAAHHHHHHHH!!!!!!!!!!!!!
More from the resident fool Markfool, I mean markfoot.
Out of all the tax returns that report small business income, lots of them are from taxpayers who have a regular paying job as an employee of someone else, and they have a small proportion of their income coming from their small biz income.
Media Matters for America documented, according to the Tax Policy Center's table of 2007 tax returns that reported small business income, 481,000 of those returns -- about 2 percent -- are in the top two income tax brackets, which include all filers with taxable incomes that would be affected.
Good info, LLL. I've been trying to listen to as much righty radio as I can take lately, and they're really suckering their listeners with this, often framing it as "a restaurant that makes 250k will be taxed at (the rate for an individual taxable income, or profit, over that amount)"
I just discovered Mark Levin(sp), I don't know if he just recently came on the radio here in SoCal, or id I just hadn't stumbled on him, but he's a nut. More emotional and childish than Sean Hannity, IMO, I thought he was doing a parody cartoon voice at first. He told his audience that a nurse and a steel worker make a quarter million a year between them.
Well, he didn't say it straight out, he just said that they'd be taxed at the "rich" rate.
Wow, really impressed with you all today, I think I was only called one name this time. LuvLuLu worked in Fool, Ok, here are the most common deductions that a small business may take, - Auto Expense ((lowering if you have SUV's or Trucks), Going into Business Expense, Education, Legal Professional Fees, Bad Debts (% will decrese), Business Entertaining, Travel, New Equipment, Interest (not able to write off after 2010), Moving Expenses, Software, Charitable Contributions ( Not able to write off after 2010), Taxes, Advertising and Printing,
Snice you are not able to write off as much, it will show you make more money. This now ill put many small business owners about 250K Grossed and in the future he is looking at taxing your gross income.
Gross - The term gross refers to the total amount made as a result of some activity. It can refer to things such as total profit or total sales. Gross represents the "whole part". No deductions have been made from the gross value.
Net - Net refers to the amount left over after all deductions are made. Once the net value is attained, nothing further is subtracted. The net value is not allowed to be made lower.
Obama's Plan does have a $500 tax credit to help, but how does that help when your having to increse your SS contributions to the governmment per employee, plus Medicare and Medicad. Here is a link to his plan, there is no direction on what he will do, but based on what we have heard on what he is taking away from those above 250K, we know what we lose.
http://www.barackobama.com/pdf/SmallBusinessFINAL.pdf
There are many things I wish the media would help the average person understand. Putting forth this 2% figure is misleading. that only represents the number of companies that file income tax returns. the vast majority of small businesses inthe US are structured in such a way that their income is passed along to the owners who then pay the income tax. read up on partnerships, LLCs, LLPs, subchapter S etc... Many of the people with taxable income above 250,000 are small business owners that receive their income as distributions from their company. Without giving the background or detail, I think this is where many of the right are coming from. My source - my own business and how the partners are paid from the company cash flow. I know most of you want to make beieve this will not hit small businesses but it is.
I will discalam that I am in the cross hiars of the proposed legislation and part owner of a small business. I downsized many things last summer reading the tea leaves instead of drinking the cool-aid. However, the first 50,000, even if not taxed, does not cover my monthly minimum obligations. Then on top of that would come food and clothing and similar.
With significant questions surrounding both the amount of future business and the taxes to be paid I have had to plan for my family's future. The athletic sponsorship was not renewed. company provided phones gone, web video meetings instead of travel, dropped subscritions to trade journals, newspapers, etc, a ban on any new advertizing, and the list goes on and on. Passagre of the Obama tax plan would cost 30% of my staff their jobs.
Before evryone says I don't understand the other side, a little background. I grew up inner city as a minority. 800 square foot house for a family of 7. Working since I was 9 years old, put myself through college while the "rich" kids partied. It will be with great inner pain that I let staff go, but Obama gives me no option.
So when Maria or others comment on small businesses being hit, go ahead be pedantic and make fun of her word choice, make fun of us hard working (72 hours per week average worked the last three months) owners, but when there is no one around to give you a job, other than uncle sam handing you a shovel and saying go dig and make new highway, remember you were warned.
And I notice you are all the same commenters that said all that talk of stock market doom and gloom was fantasy = that was when the dow was 9000. Where is it now?
My husband and I fell into that catagory before we retired. She needs to ask people who have been there. We have never given to a charity for a tax break, we give to a charity because it is a good thing to do.
My husband was against Bush's tax break for the wealthy. My husband has a MBA and worked for intel for 18 years. This election, we turned from Republicans to Democrats because of the ridiculous claims that the Republicans make.
It is not charity if you give it to get back....what a bunch of biblical hipocrates these people are.....
COuld someone find out if Bartiromo has
a) ever founded a company
b) filed a simple 1040 Schedule C tax return (what the vast majority of small business owners file)
c) has played with TurboTax
I'd settle for any or all of the above to qualify her for pontificating. But as a serial entrepreneur I get a strong sense she's done none of the above.
http://www.cnbc.com/id/15838253/