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

[TableFun]

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

The Most Patriotic Thing You Can Do

by Mark Cuban

Bust your ass and get rich.

Make a boatload of money. Pay your taxes. Lots of taxes. Hire people. Train people. Pay people. Spend money on rent, equipment, services. Pay more taxes.

When you make a shitload of money. Do something positive with it. If you are smart enough to make it, you will be smart enough to know where to put it to work.


continued..........

The Most Patriotic Thing You Can Do blog maverick

 

[mrplunkey]

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

And some of them get health insurance.

Qualified Subway workers enjoy a variety of health and wellness benefits, such as medical, dental, vision, life, and disability insurance. Eligible associates may receive savings benefits, such as a 401(k) retirement plan with a 75% company match of up to 4% of annual salary. Other work benefits include paid time off, free food, restaurant discounts, direct deposit pay, and credit union membership.

Maybe someone should send this guy a thank you note.

 

[musclemom]

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

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.

But that's not right. First of all, you're really making a huge amount of assumptions.

But more importantly, you're putting things together to get one set of numbers but not taking another into consideration to get the other part.

As a business owner, he pays XYZ in state, local and fed. taxes and other associated fees.

His business pays XYZ in other operational fees (a lot of which are tax deductible or can be tax shelters).

If he's collecting a salary from the company, then he has to pay taxes on his income, just like anybody else who gets a W2, but that is entirely separate from the taxes the company pays.

You don't take the total in taxes on everything then count that only against what you assumed his personal gross income is (and I realize everything is hypothetical here, we're talking for the sake of illustration), because the other stuff is company stuff.

So, if you're counting the total taxes, then you count the total income, i.e., 6.3 million. Looked at that way, he paid $714k on $6.3 million (I could very well be wrong, I totally admit I have MAJOR problems with both economics and math).

We're working with simplified and admittedly hypothetical numbers. However, you guesstimated Mr. Fleming could very well pay $278k in taxes on $678k in income, which means 41% of his gross income goes to taxes.

My husband pays roughly 28% of his gross income in taxes (and soc. sec., medicare, etc) but his gross income is somewhere in the vicinity of 200% less than Mr. Fleming's.

Looks to me like Mr. Fleming is getting off easy either way.

 

[TableFun]

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

but his gross income is somewhere in the vicinity of 200% less than Mr. Fleming's.

I don't see how that is Mr Flemig's problem.

 

[miplank]

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

your husband should've opened up some subways

 

[brownbrown]

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

My husband pays roughly 28% of his gross income in taxes (and soc. sec., medicare, etc) but his gross income is somewhere in the vicinity of 200% less than Mr. Fleming's.

Looks to me like Mr. Fleming is getting off easy either way.

He sure is

 

[TableFun]

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

your husband should've opened up some subways

 

[TableFun]

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

or

 

[musclemom]

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

your husband should've opened up some subways

In all honesty, were the putting aside of money something we were able to do, then purchasing a franchise might be a nice little family business.

However, it is very difficult to put money away when you are living tight to the vest. Every time we get a little set aside, something comes up (car, health, dental, house) and poof, there goes a grand or two in the blink of an eye that took you the better part of a year to put away.

And this is not directed at you, Plank:

I don't appreciate mockery when I'm trying to understand, TableFun. I don't think my questions are unreasonable and I do appreciate Plunkey taking the time he did with his response, but his response only created more questions in my mind.

 

[mrplunkey]

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

But that's not right. First of all, you're really making a huge amount of assumptions.

But more importantly, you're putting things together to get one set of numbers but not taking another into consideration to get the other part.

As a business owner, he pays XYZ in state, local and fed. taxes and other associated fees.

His business pays XYZ in other operational fees (a lot of which are tax deductible or can be tax shelters).

If he's collecting a salary from the company, then he has to pay taxes on his income, just like anybody else who gets a W2, but that is entirely separate from the taxes the company pays.

You don't take the total in taxes on everything then count that only against what you assumed his personal gross income is (and I realize everything is hypothetical here, we're talking for the sake of illustration), because the other stuff is company stuff.

So, if you're counting the total taxes, then you count the total income, i.e., 6.3 million. Looked at that way, he paid $714k on $6.3 million (I could very well be wrong, I totally admit I have MAJOR problems with both economics and math).

We're working with simplified and admittedly hypothetical numbers. However, you guesstimated Mr. Fleming could very well pay $278k in taxes on $678k in income, which means 41% of his gross income goes to taxes.

My husband pays roughly 28% of his gross income in taxes (and soc. sec., medicare, etc) but his gross income is somewhere in the vicinity of 200% less than Mr. Fleming's.

Looks to me like Mr. Fleming is getting off easy either way.

My assumptions were very conservative. He's paying much more in taxes than he could ever make in take-home profit at any assumption level anyone could reasonably make.

If Fleming takes money out via salary, he pays his withholding (~ 9%) as well as the company's portion (~ 9%) in taxes, then he pays income taxes (35% federal and 6% Louisiana state). Those aren't assumptions, those are just the way things are. So if he issues himself $1 in pay, he'll pay 18% + 35% + 6% = 59% in taxes. In all fairness, the 18% would come out of pre-tax profits, but the company would still be taxed 35% + 6% on that income. There is a cap on those payroll taxes, but it's fairly high.

He'd be better of doing an LLC distribution to himself. I believe that would be at a measly 35% + 6% = 41% rate.

The other issue here is you are confusing revenue with income. You'd never calculate his tax rate based on revenue. Picture this, if I buy something for $100M and sell it for $100.001M, I had $0.001M in income. If it instead cost $0.01M and sold it for $0.011M, I'd still make $0.001. A person's wages are considered income because they presumably have no legitimate business expenses to deduct against them. But if someone finds themselves in an industry where they must supply materials or additional labor, they most definitely should recognize and deduct those expenses against their gross revenue.