$249,999.00 Is the Goal

[xsited1]

the cigarette tax cannot be sold as a tax on the poor,, it's a tax on everybody that smokes, the poor were not target as the rich have been targeted so yes, it is class warfare.

although there are many in the middle class who also smoke, most smokers are in the lower income earners....

cigarette taxes are regressive taxes on the poor and the middle class, they pay more in these taxes than do the wealthiest.

same with liquor taxes and same with gas taxes....the middle and poorer pay more of these taxes on sheer numbers than the top 5%....

This is why our tax structure needs to be viewed ON THE WHOLE, and not at just the income tax level, which only accounts for 1/3 of the revenues collected to fund our yearly budget.

You want to upset a politician? Take away the cigarette (i.e., 'sin') tax. Yes, they are punishing poor and middle-class people, but they have no problem doing this because this extra tax revenue funds some of their favorite pet projects. I'm assuming you want Obama to remove these 'sin' taxes. Not gonna happen.

 

[American Horse]

Care, Sole Ps don't operate under the same rules as scorps...but if Manu is operating his business as a Sole P, I'd be surprised...especially since he has employees. It would be a rather stupid arrangement.

Mind going into why that is so? (in relation to employees). Maybe a link or a paragraph or two so that it can be analyzed?

We do seem to be deep into tax policy and incentives here, so fleshing that out would be helpful.
....Manu should speak for himself.

It just doesn't make good sense. Why expose yourself to losing your personal assets? And why not take advantage of tax breaks given to scorps...it isn't that difficult to incorporate. But after reading what you posted above it seems clear that the reason is that it is easier to live under the radar of the IRS if you're a Sole P. The incentive you've described is the incentive to be a tax cheat. Pretty funny. I hire a few people that are Sole Ps and over the years 50% of them have not bothered paying their taxes, according to the notices the IRS sends me.

Over the 35 years I have hired SPs I have had notices only 5 or 6 times, which is nowhere near to 50% you mentioned. The IRS notices I've received suggest more like 5% of them failed to comply, if not less, so your 50% number seems extreme. But I do agree with you, until SPs have had a chance to look around at the playing field they will have started out as and will probably have stayed Sole Prorietors. That might be because they felt better situated to manipulate their tax returns, which is what the links in my post substantiated. But there are accounting costs to SCorps that SPs don't have, which may be extreme in the demands placed on the very small business, with 1 to 8-9 employees.

About risking and losing personal assetts: small business people are very often required to sign personal guarantees (if substantial assets weren't already pledged) for financial obligations in transacting business so immunity of the SCorp is effectively penetrated.

But creating an LLC does the same thing you said was a good reason to create an SCorp, it shields one from liability, and if there is only one owner, he or she can only file as an SP on schedules C & SE of 1040.

And as for liability I always resisted putting the LLC in front of my business name believing it sent a signal to my potential clients that I had a desire to be less than responsible about liability. On the other hand to seem to not take that into account might be interpreted potentially to jeopardize my fiduciary duty to my clients. I've operated since 1969 to the present with nothing more than liability insurance (as well as all the rest) for protection against lawsuits, and have never been hauled into court one time; not even close.

..

 

[WillowTree]

the cigarette tax cannot be sold as a tax on the poor,, it's a tax on everybody that smokes, the poor were not target as the rich have been targeted so yes, it is class warfare.

although there are many in the middle class who also smoke, most smokers are in the lower income earners....

cigarette taxes are regressive taxes on the poor and the middle class, they pay more in these taxes than do the wealthiest.

same with liquor taxes and same with gas taxes....the middle and poorer pay more of these taxes on sheer numbers than the top 5%....

This is why our tax structure needs to be viewed ON THE WHOLE, and not at just the income tax level, which only accounts for 1/3 of the revenues collected to fund our yearly budget.

it only taxes those who smoke,, want to NOT pay the tax?? Do Not smoke,, same with alcohol,, easy smeasy..

 

[American Horse]

another question....

I remember once hearing that many senators and congressmen and even the Cheney's and the GWBush's were considered small business owners...manily because they reported income from books they or their wives have writen....and outside interests that produced income...outside of their main jobs....

have you heard this?

care

This may be true and probably is, but the income they earn as Senators etc is not reported on schedule C but goes straight to form 1040. An author like a realtor is an indepent contractor and reports income on schedule C as an SP. But the senator and his spouse cannot mix their income: All tax liabilities for the Senatorial income (in this case) is subject to ordinary earned income rules.

And no Care, SP's are not corporations, as you seem unwilling to accept....why is that?

 

[Care4all]

another question....

I remember once hearing that many senators and congressmen and even the Cheney's and the GWBush's were considered small business owners...manily because they reported income from books they or their wives have writen....and outside interests that produced income...outside of their main jobs....

have you heard this?

care

This may be true and probably is, but the income they earn as Senators etc is not reported on schedule C but goes straight to form 1040. An author like a realtor is an indepent contractor and reports income on schedule C as an SP. But the senator and his spouse cannot mix their income: All tax liabilities for the Senatorial income (in this case) is subject to ordinary earned income rules.

And no Care, SP's are not corporations, as you seem unwilling to accept....why is that?

oh i accept it now....did i say i didn't after it was posted that it did not include them?

I just am sticking with what Ravi mentioned that manu probably is an scorp with having employees as he mentioned so he is probably NOT this sole proprietor as you suggested so, again, i stick by my response to him, until he can clarify his statement.

btw....Can Sole proprietors also have employees on a payroll?

if they can....then i am more than willing to say i was wrong in my comments back to manu...

Care

 

[American Horse]

nonfarm proprietor income registered the highest net misreporting percentage of any type of individual business income: 57 percent of net income that should have been reported was misreported....

soooo 57% of some of the sole proprietor's income is MISREPORTED...which avoids taxes....

nice....too bad the working class earning a salary can not MISREPORT their income by 57% to avoid taxes...huh?

I hate to disabuse you of this misconception, but these people are predominantly working class people, although what they earn is not called wages or a salary but according to the tax code its called earning a "profit"

now, can;t a "sole proprietor" also be an S-corp or LLc etc....or is sole proprietor the name given to people that do not incorporate their business?

see my post responding to Ravi on LLC's which 'must be Sole Proprietors if there is only one owner involved' in the business entity.

i find it hard to believe the 21 million sole proprietors do not incorporate to protect their own personal finances.....

then this is new information for you to take into account. See my response to Ravi to provide some background on the reasons for that.

i will try to find out...

Care

I would suggest you talk not with an ordinary "accountant" but talk to an actual CPA for some illuminating answers to these misconceptions.

 

[American Horse]

btw....Can Sole proprietors also have employees on a payroll?

if they can....then i am more than willing to say i was wrong in my comments back to manu...

Care

They absolutely can, and do. They may start out as an individual with no employees (but for themself) but as their business grows they may add any number of employees and retain the status of sole proptietorship, and they will have any number (no limit) of employees on a payroll.

At some point they may assume that their pockets have become too deep, and they will have to protect themselves by creating a corporation to do that, not from ordinary liabilities but perhaps liabilities relating to their status as an employer (but Work Comp Insurance protects on most issues but not all- discrimination for instance). But in this discussion we go from talking with a CPA to talking to an attorney out of necessity. CPA's will not answer questions on legal issues.

 

[Care4all]

nonfarm proprietor income registered the highest net misreporting percentage of any type of individual business income: 57 percent of net income that should have been reported was misreported....

soooo 57% of some of the sole proprietor's income is MISREPORTED...which avoids taxes....

nice....too bad the working class earning a salary can not MISREPORT their income by 57% to avoid taxes...huh?

I hate to disabuse you of this misconception, but these people are predominantly working class people, although what they earn is not called wages or a salary but according to the tax code its called earning a "profit"

Does this make it okay to you, cheating on taxes?

And these people are NOT the ones being hit by the higher taxes cuz they don't make $250k in profit, right?

now, can;t a "sole proprietor" also be an S-corp or LLc etc....or is sole proprietor the name given to people that do not incorporate their business?

see my post responding to Ravi on LLC's which 'must be Sole Proprietors if there is only one owner involved' in the business entity.

Okay, i will look for the post explaining this, ty.

i find it hard to believe the 21 million sole proprietors do not incorporate to protect their own personal finances.....

then this is new information for you to take into account. See my response to Ravi to provide some background on the reasons for that.

ok, I will.

i will try to find out...

Care

I would suggest you talk not with an ordinary "accountant" but talk to an actual CPA for some illuminating answers to these misconceptions.

ok, thanks!

 

[Immanuel]

btw....Can Sole proprietors also have employees on a payroll?

if they can....then i am more than willing to say i was wrong in my comments back to manu...

Care

Yes, sole proprietorships can have employees on a payroll. In fact, they can have thousands of employees, although that would be foolish with all the liabilities it would intail. Ford could be a sole proprietorship if the the owners had not seen the benefit of taking it public. There are many reasons sole proprietorships become corporations from raising capital to limited liability of the owners.

For example, a dental office can be run as a sole proprietorship and employ say ten employees for various functions. But, in so doing, the dentist is risking many things including losing his home and personal assets if even the slightest thing goes wrong. That is one reason people incorporate. The only thing this dentist would risk losing should there be a lawsuit, if he incorporates, is the assets of the business rather than his personal assets.

Immie

 

[American Horse]

nonfarm proprietor income registered the highest net misreporting percentage of any type of individual business income: 57 percent of net income that should have been reported was misreported....

soooo 57% of some of the sole proprietor's income is MISREPORTED...which avoids taxes....

nice....too bad the working class earning a salary can not MISREPORT their income by 57% to avoid taxes...huh?

I hate to disabuse you of this misconception, but these people are predominantly working class people, although what they earn is not called wages or a salary but according to the tax code its called earning a "profit"

Does this make it okay to you, cheating on taxes?

And these people are NOT the ones being hit by the higher taxes cuz they don't make $250k in profit, right?

No I don't think it is alright, and it means that I must pay more taxes to make up for loss, but in a vastly diluted proportional amount. But it must also be seen as a form of protest, and perhaps that has a value in "feedback" to inform the system which may exceed its loss in value to tax revenues.

These people understand the potential legal ramifications to mis-stating income, as should some recent politicians, who now hold high office. (I hope that wasn't a cheap shot! )

Again it's mostly about incentives.

 

[Care4all]

btw....Can Sole proprietors also have employees on a payroll?

if they can....then i am more than willing to say i was wrong in my comments back to manu...

Care

Yes, sole proprietorships can have employees on a payroll. In fact, they can have thousands of employees, although that would be foolish with all the liabilities it would intail. Ford could be a sole proprietorship if the the owners had not seen the benefit of taking it public. There are many reasons sole proprietorships become corporations from raising capital to limited liability of the owners.

For example, a dental office can be run as a sole proprietorship and employ say ten employees for various functions. But, in so doing, the dentist is risking many things including losing his home and personal assets if even the slightest thing goes wrong. That is one reason people incorporate. The only thing this dentist would risk losing should there be a lawsuit, if he incorporates, is the assets of the business rather than his personal assets.

Immie

Maybe you can answer this Immie...

Why would a sole proprietor with a number of employees choose to not incorporate?

Is there an advantage to not doing such, or are these people just gamblers and think nothing can go wrong with employees suing or customers suing?

OR are these 21 million sole proprietors primarily individual owners of themselves of their own labor...like they are plumbers in business for themselves or a carpenter in business for themsleves or a garage door installer in business for themsleves, or perhaps even people who sell stuff on ebay?

I just do not understand why sole propretors would not be scorps or llcs or something like that, which would protect their personal wealth?

I have not read what American Horse had said to read, so maybe that explained it?


And good afternoon, glad to see you posting here!

Care

 

[Ravi]

another question....

I remember once hearing that many senators and congressmen and even the Cheney's and the GWBush's were considered small business owners...manily because they reported income from books they or their wives have writen....and outside interests that produced income...outside of their main jobs....

have you heard this?

care

This may be true and probably is, but the income they earn as Senators etc is not reported on schedule C but goes straight to form 1040. An author like a realtor is an indepent contractor and reports income on schedule C as an SP. But the senator and his spouse cannot mix their income: All tax liabilities for the Senatorial income (in this case) is subject to ordinary earned income rules.

And no Care, SP's are not corporations, as you seem unwilling to accept....why is that?

oh i accept it now....did i say i didn't after it was posted that it did not include them?

I just am sticking with what Ravi mentioned that manu probably is an scorp with having employees as he mentioned so he is probably NOT this sole proprietor as you suggested so, again, i stick by my response to him, until he can clarify his statement.

btw....Can Sole proprietors also have employees on a payroll?

if they can....then i am more than willing to say i was wrong in my comments back to manu...

Care

Yes, you can...but it seems a bad thing to me, if you have very many employees. The only benefit I can see is that you can write off your losses in a way that you can't as an scorp. More than likely though, if you are reporting all of your income, you'll pay more in taxes as the business owner.

 

[Jon]

cigarette taxes are regressive taxes on the poor and the middle class, they pay more in these taxes than do the wealthiest.

These taxes are regressive if you consider the after-tax effect they have. They are proportionate in that all smokers pay the same rate. Don't try to paint these as punishment to the lower income earners. If they don't want to pay these taxes, they don't have to smoke. If they don't smoke, they are less likely to require health care in the future, and thus, we won't need to fund so many health care projects.

The state of Arkansas just passed a new tax rate on tobacco projects. The funds from this tax are earmarked for funding new trauma centers, AHEC's, and other medical service projects. Why? Because smokers are likely to require those services someday.

 

[Care4all]

the cigarette tax cannot be sold as a tax on the poor,, it's a tax on everybody that smokes, the poor were not target as the rich have been targeted so yes, it is class warfare.

although there are many in the middle class who also smoke, most smokers are in the lower income earners....

cigarette taxes are regressive taxes on the poor and the middle class, they pay more in these taxes than do the wealthiest.

same with liquor taxes and same with gas taxes....the middle and poorer pay more of these taxes on sheer numbers than the top 5%....

This is why our tax structure needs to be viewed ON THE WHOLE, and not at just the income tax level, which only accounts for 1/3 of the revenues collected to fund our yearly budget.

it only taxes those who smoke,, want to NOT pay the tax?? Do Not smoke,, same with alcohol,, easy smeasy..

i don't smoke.

But these are taxes that these people pay NONE THE LESS and they contribute to paying for the bills whether you like it or not....and allow income taxes to be lower on the masses because they have put the "bill" on the backs of these people.

INCOME TAXES collected are LESS THAN 1/3 of the money needed for the gvt to pay their budget.

All taxes collected should be considered, not just one small portion of them....1/3 of them...?

This is MEANT to only divide us and pull the class warfare card.... this is what the Wealthy want at this point i am beginning to believe.

a Flat tax with a standard deduction, is what i am beginning to believe would be more fair than the way we have it where every deduction under the sun is allowed, while we have 60% of the country filing their own taxes on the short form.....they get no deductions at all, over and above the standard.

care

 

[Care4all]

cigarette taxes are regressive taxes on the poor and the middle class, they pay more in these taxes than do the wealthiest.

These taxes are regressive if you consider the after-tax effect they have. They are proportionate in that all smokers pay the same rate. Don't try to paint these as punishment to the lower income earners. If they don't want to pay these taxes, they don't have to smoke. If they don't smoke, they are less likely to require health care in the future, and thus, we won't need to fund so many health care projects.

The state of Arkansas just passed a new tax rate on tobacco projects. The funds from this tax are earmarked for funding new trauma centers, AHEC's, and other medical service projects. Why? Because smokers are likely to require those services someday.

that's just bullcrap jsanders...

I don't agree what so ever with any kind of sin tax....if it is bad for people then BAN IT, don't tax the hell out of them and put the bills of the country on their back....

my state raised their cigarette tax to $2.00 a pak to pay for the healthcare of children.

they will not benefit from these services for the most part and neither will the people in your state, paying for a trauma center... you think these smokers are not going have to pay their own hospital bills or have insurance just as anyone else getting treatment at them? bullcrap....nothing but bullcrap...

putting taxes on to addictive things is absolutely heartless also and wrong, in every ethical manner....imo.

care

 

[Immanuel]

Maybe you can answer this Immie...

Why would a sole proprietor with a number of employees choose to not incorporate?

I am sure that there are many reasons that I could not even begin to guess. Some might simply the cost of incorporating or the belief that they are simply too small of a business to bother. My personal opinion is that when the business gets big enough to hire, (non-family) employees that the risk is too great to take to not incorporate.

Is there an advantage to not doing such, or are these people just gamblers and think nothing can go wrong with employees suing or customers suing?

I can't think of any real good advantages at the moment especially since the cost to incorporate is minnimal today. But who knows, maybe they are just foolish and are afraid someone will take control of the corporation? You know... those evil corporate raiders out there.

OR are these 21 million sole proprietors primarily individual owners of themselves of their own labor...like they are plumbers in business for themselves or a carpenter in business for themsleves or a garage door installer in business for themsleves, or perhaps even people who sell stuff on ebay?

I just do not understand why sole propretors would not be scorps or llcs or something like that, which would protect their personal wealth?

Again, I can't really say what is the makeup of the population of sole proprietorships. There are just too many reasons why people don't incorporate.

And good afternoon, glad to see you posting here!

Care

Good afternoon as well and thanks.

Immie

 

[Jon]

cigarette taxes are regressive taxes on the poor and the middle class, they pay more in these taxes than do the wealthiest.

These taxes are regressive if you consider the after-tax effect they have. They are proportionate in that all smokers pay the same rate. Don't try to paint these as punishment to the lower income earners. If they don't want to pay these taxes, they don't have to smoke. If they don't smoke, they are less likely to require health care in the future, and thus, we won't need to fund so many health care projects.

The state of Arkansas just passed a new tax rate on tobacco projects. The funds from this tax are earmarked for funding new trauma centers, AHEC's, and other medical service projects. Why? Because smokers are likely to require those services someday.

that's just bullcrap jsanders...

I don't agree what so ever with any kind of sin tax....if it is bad for people then BAN IT, don't tax the hell out of them and put the bills of the country on their back....

my state raised their cigarette tax to $2.00 a pak to pay for the healthcare of children.

they will not benefit from these services for the most part and neither will the people in your state, paying for a trauma center... you think these smokers are not going have to pay their own hospital bills or have insurance just as anyone else getting treatment at them? bullcrap....nothing but bullcrap...

putting taxes on to addictive things is absolutely heartless also and wrong, in every ethical manner....imo.

care

Sorry, Care, not only do I wholeheartedly disagree, but this if the first and hopefully last time I can say that your opinion is stupid.

Unethical to tax addictive things? The sin tax is one of THE most fundamental taxes, it satisfies every principal of a "fair tax." Most taxes break the rule of "changing the behavior of the taxpayers." Any behavioral change that a sin tax creates is a POSITIVE change (ie, they stop smoking).

I never said that paying cigarette taxes would lower the costs of health care for everyone, or even smokers specifically. But it funds health centers, providing better care. Of course people are still going to pay. Why the hell shouldn't they?

And banning tobacco would be more costly than you can possibly imagine.

 

[DiveCon]

I also suggested this yesterday and the day before, i also believe the threshold shold be a little higher...i was willing even to go up to a million bucks before kicking in because i felt many of these people earning these incomes were in metropolitan cities on the east and west coast, and I felt the cost of living was so high in these spots that the threshold needed to be higher to accomodate such....

But none the less, i still say the lawyer doesn't have a lightbulb on, at least when it comes to her own tax situation with a progressive tax structure.

Care

Lets figure this out together, Care. Obama is going to borrow 2 trillion dollars, $250k↑ income taxe rates are going up, your chartiable tax deductions are greatly reduced and you have been demonized by this President as “Rich”. Who will this President go after, in large part, to repay that 2 trillion or a 1 trillion dollar government ran healthcare, etc........
I can't understand either.....lol

jr,
there is no mistake that $25,000 a MONTH net income for an individual is an aweful lot of money....

for the past 2 years in a row.....Matthew and I have lived off of less money in a year, than the money these people net in an entire month.....

People making $20-$25k a MONTH NET, are Rich people.

And honestly, no one on the left started calling this "class warfare" ....it is the right that started saying we were punishing them and deamonizing them and putting down success and all of that SHIT.....

if anything i see it as the wealthiest getting their pawns, the lowly on the totem poll, to fight this battle against the poor for them..... Now there is class warfare comments all over the place from left and right...but the left did not start this...

progressive income taxes have always been accepted, you pay according to your means...this is what made us a strong middle class over the years...

so if there is this division and bad conotation towards people in our upper classes....the right saw to this happening as far as i've seen.

care

PS. jr, is the Trillion dollar health care plan the cost of it for 10 years, 5 years or one? Do you know?*

because you ARE demonizing them
you are trying to say they earn too much and you want to take what they earned from them

 

[DiveCon]

Dosen't the average working, tax paying man have to work for the first 4 months to pay his taxe bill???

the average tax payer, yes.

this includes all taxes though, including SS taxes, which those making over $100k don't pay any over the $100k so, although their income tax burden may go up their overall tax burden does NOT.

thats just stupid, care, if they income tax burden goes up, their over all tax burden will also
dont forget that there is nothing stopping the dems from raising that limit on SS/FICA taxes either

 

[DiveCon]

it's not class warfare...

taxes also went up on the middle and the poor with the added cigarette taxes he's adding to them ....but nooooooooo, that doesn't count because it is not income tax? Bulloney!

How many of the poor will be able to take advantage of the new car credit they are offering? near none, because even with the credit, they can't afford the new car....but the middle and the upper classes can take advantage of this credit....

All I am trying to say is that these bills are filled with all kinds of things that help or advantage those that earn more, along with advantages to those who earn less...

If everything is taken on the whole, this plan is not as lopsided and focussed on "taxing" the rich and stealing from them as you claim....thus the mantra on the right, for soley POLITICAL PURPOSES....

ALL of our workers SS Surplus moneys are being used to pay for what income taxes are suppose to pay....that is nearly 300 billion a year now of the lower and middle classes money being STOLEN to pay for what these income tax payers are suppose to pay.....

to say that the poor do not support or pay taxes to support this country is nothing but a lie....

Care

because they can easily avoid those taxes
STOP SMOKING