Wall Street Journal BLASTS McCain

[Aiemond]

Your not calcualting it right. Sole proprietorships or llc are not taxed based on income, but on profit. He's not going to be raised to a higher tax bracket. I did some more research on this and your tax calculations are wrong.

from
http://www.nolo.com/article.cfm/objectId/FE1875A0-239D-48E5-B7D2565E0CB62159/catID/3FED35C1-7BBA-4468-901354F101CBEBE2/111/182/147/ART/

"You'll be taxed on all profits of the business -- that's total income minus expenses -- regardless of how much money you actually withdraw from the business. In other words, even if you leave money in the company's bank account at the end of the year (for instance, to cover future expenses or expand the business), you must pay taxes on that money.

You can deduct your business expenses just like any other business. You are allowed to expense (deduct) much of the money you spend in pursuit of profit, including operating expenses, product and advertising costs, travel expenses, and some of the cost of business-related meals and entertainment. You can also write off certain start-up costs and the cost of business equipment and other assets you purchase for your business."

Also, (http://www.nolo.com/article.cfm/objectID/B407A867-3EE5-410F-8718C78B2EF698D6/111/277/235/ART/)

"How tax savvy a businessperson you are has a great effect on how much money is in your pocket at the end of the year. You probably know that the tax code allows you to deduct costs of doing business from your gross income. What you are left with is your net business profit. This is the amount that gets taxed."

Lets say that this is a llc and all 5 members have equal ownership.
First, you have to deduct business expenses. So this would be the operating expenses (buying parts, gas for travel, etc) I don't know how much this would be.

Then, you divide the profits or losses into 5 and thats how much each person gets and is taxed for.

If it is a sole proprietorship, then one guy owns it and the 5 other are employees. So, the employees salaries would be counted as an expense.

 

So, your small business owner , in fact, does not enter a new bracket and thus does not pay more from the cuts. But, he does get additional help from the "helping work pay" benifit and the increased access to incubators that Obama's plan would have.

 

Lastly, I admit i messed up on earlier posts on the small business tax code. I did a bit of research so i could get it right.