Please help me to help myself ... I really want to have compassion for Rep. Fleming

[musclemom]

Look, I'm not the smartest bulb in the box when it comes to economics, I admit that. But isn't the money he reinvests into his own companies separate from what he puts in his pocket as income? He's talking about his personal income, right? And after he's taken care of his business expenses and fed his family he's left with $400k and considers this a hardship.

If I'm wrong, I can accept that, I just want to understand.

Rep. John Fleming (R-La.) appeared on MSNBC Monday morning to express opposition to President Barack Obama's deficit reduction plan, which includes a proposal to raise taxes on the wealthy.

Fleming charged that the plan is a terrible idea which kills jobs provided by wealthy "job creators" who pay personal income taxes. When asked about his business ventures -- including his role in a number of Subway restaurants and UPS stores -- from which he earned $6.3 million last year, Fleming told MSNBC host Chris Jansing that his business expenses left him with little to tax "by the time I feed my family."

Fleming told Jansing that the $6.3 million is "before you pay 500 employees, you pay rent, you pay equipment and food."

"The actual net income of that was a mere fraction of that amount."

“By the time I feed my family, I have maybe $400,000 left over," Fleming said.

Jansing pointed out that to a person making $40,000 or $50,000 per year, making $400,000 annually is "not exactly a sympathetic position," but Fleming responded by calling his success a "virtue" and noting that “class warfare has never created a job."

"This is all about creating jobs," Fleming said. "This is not about attacking people who make certain incomes."

John Fleming, GOP Congressman, Blasts Obama Over Buffett Rule: I Can't Afford A Tax Hike

 

[EnderJE]

Re: Please help me to help myself ... I really want to have compassion for Rep. Flemi

I would have thought he would have paid himself less and and used more company assets.

I also thought that the tax hike would be for people who's personal income is in the millions rage and not a business.

 

[-SD-]

Re: Please help me to help myself ... I really want to have compassion for Rep. Flemi

Would you have posted this if he had a "D" after his name?

 

[musclemom]

Re: Please help me to help myself ... I really want to have compassion for Rep. Flemi

Would you have posted this if he had a "D" after his name?

Actually took me a second to figure out what you were referencing. His political affiliation didn't even factor into the vapor lock my brain went into.

But short answer, yes.

Also didn't know he's a representative for the state of Louisiana (the ironies just keep coming) until I went to his website, either.

 

[mrplunkey]

Re: Please help me to help myself ... I really want to have compassion for Rep. Flemi

Look, I'm not the smartest bulb in the box when it comes to economics, I admit that. But isn't the money he reinvests into his own companies separate from what he puts in his pocket as income? He's talking about his personal income, right? And after he's taken care of his business expenses and fed his family he's left with $400k and considers this a hardship.

If I'm wrong, I can accept that, I just want to understand.



John Fleming, GOP Congressman, Blasts Obama Over Buffett Rule: I Can't Afford A Tax Hike

This is just a wild guess, but he's mostly likely an LLC, where the profits of the company flow through his personal tax return. So he'd get to expense his depreciation expenses as he goes, but new equipment/facilities/services would have to be funded from either profits, debt or fresh money he puts into the business.

As far as a $400k profit on $6.3M in sales, it really depends on three things:

1) What's the risk profile? On any given year, is his income anywhere from -$200k to +$500k, or is it a steady $400k just like a clock?

2) How much capital does he deploy? Is he making $400,000 on $1,000,000 worth of assets (which would be great) or is he making $400,000 on $10,000,000 worth of assets (which would be terrible).

3) What's his opportunity cost? Did he give-up a $450,000/year law practice to setup this chain?

Did he say his profit was pre or post tax? If he's making $400k after taxes on $6.3M, that's 6% -- which is decent. If he's paying another $160K in taxes, then he's only at 3.8% which isn't so impressive IMO.

Here's an interesting way to look at this -- Let's back into his income statement:

400K in after-tax profit (I'm assuming it's after tax)

Federal: 35% (yeah, the first part is cheaper, but not material)
State (LA): 6%

So 400K/0.59 = $678K pretax -- so he's paying $278 in income taxes

6.3M in sales @ 4% sales tax = 242K in sales taxes

His costs must be = 6.3M - 678K = $5.6M

Let's assume labor is 40% of his cost (conservatively). So payroll taxes ~ 9% (UI, SS, Medicare, DI) = 5.4M * .4 * .09 = $194k

Let's ignore licenses, property taxes, use taxes, permitting, regulatory costs, etc. etc.

So this $6.3M business generates:

$278k
$242k
$194k
----
$714K in taxes

So you tell me (honestly here, not messing with you). Is it reasonable for someone to be forced into $714K in taxes just so they can risk making $400k in income?

Seems high to me.

 

[lartinos]

Re: Please help me to help myself ... I really want to have compassion for Rep. Flemi

Ya, the average Joe feels real bad for him lol.

 

[TableFun]

Re: Please help me to help myself ... I really want to have compassion for Rep. Flemi

This is just a wild guess, but he's mostly likely an LLC, where the profits of the company flow through his personal tax return. So he'd get to expense his depreciation expenses as he goes, but new equipment/facilities/services would have to be funded from either profits, debt or fresh money he puts into the business.

As far as a $400k profit on $6.3M in sales, it really depends on three things:

1) What's the risk profile? On any given year, is his income anywhere from -$200k to +$500k, or is it a steady $400k just like a clock?

2) How much capital does he deploy? Is he making $400,000 on $1,000,000 worth of assets (which would be great) or is he making $400,000 on $10,000,000 worth of assets (which would be terrible).

3) What's his opportunity cost? Did he give-up a $450,000/year law practice to setup this chain?

Did he say his profit was pre or post tax? If he's making $400k after taxes on $6.3M, that's 6% -- which is decent. If he's paying another $160K in taxes, then he's only at 3.8% which isn't so impressive IMO.

Here's an interesting way to look at this -- Let's back into his income statement:

400K in after-tax profit (I'm assuming it's after tax)

Federal: 35% (yeah, the first part is cheaper, but not material)
State (LA): 6%

So 400K/0.59 = $678K pretax -- so he's paying $278 in income taxes

6.3M in sales @ 4% sales tax = 242K in sales taxes

His costs must be = 6.3M - 678K = $5.6M

Let's assume labor is 40% of his cost (conservatively). So payroll taxes ~ 9% (UI, SS, Medicare, DI) = 5.4M * .4 * .09 = $194k

Let's ignore licenses, property taxes, use taxes, permitting, regulatory costs, etc. etc.

So this $6.3M business generates:

$278k
$242k
$194k
----
$714K in taxes

So you tell me (honestly here, not messing with you). Is it reasonable for someone to be forced into $714K in taxes just so they can risk making $400k in income?

Seems high to me.

There's an awful lot of numbers in this post. Just sayin.

 

[mrplunkey]

Re: Please help me to help myself ... I really want to have compassion for Rep. Flemi

There's an awful lot of numbers in this post. Just sayin.

It's much easier to say: "He needs to pay his fair share!!!"

Bottom line is he pays waaaaaay more in taxes than he ever takes home in pay.

 

[TableFun]

Re: Please help me to help myself ... I really want to have compassion for Rep. Flemi

It's much easier to say: "He needs to pay his fair share!!!"

Bottom line is he pays waaaaaay more in taxes than he ever takes home in pay.

precisely.

 

[mrplunkey]

Re: Please help me to help myself ... I really want to have compassion for Rep. Flemi

precisely.

Maybe we'll get lucky and drive him out of business. That will sure show those greedy rich people.

And let's not even dig into the payroll and income taxes those 500 jobs are forced to pay as well.