Sunday October 12th, a quiet suburb in Ohio -- A 34 year old man is throwing a football around with his 13 year old son when a gaunt politician, campaigning in his neighborhood, is fawned over by his neighbors.
Frustrated that his naive neighbors weren't "asking him tough enough questions", Samuel J. Wurzelbacher decides to approach the candidate. "I thought, you know, I'll go over there. I've always wanted to ask one of these guys a question and really corner them."
He shakes hands with the candidate and tells him that he wants to buy the business he works for, and asks "Your new tax plan is going to tax me more, isn't it?"
Now it turns out that the politician was Barack Obama, and Samuel Joseph Wurzelbacher is "Joe the Plumber" that McCain was trying to rub in Obama's face during the debate:
McCain: Now, my old buddy, Joe, Joe the plumber, is out there. Now, Joe, Senator Obama's plan, if you're a small business and you are able [to buy the company] -- and your [boss] -- the guy that sells to you will not have his capital gains tax increase, which Senator Obama wants, if you're out there, my friend, and you've got employees, and you've got kids, if you don't get -- adopt the health care plan that Senator Obama mandates, he's going to fine you.
Now, Senator Obama, I'd like -- still like to know what that fine is going to be, and I don't think that Joe right now wants to pay a fine when he is seeing such difficult times in America's economy.
This is the famous exchange that leads to McCain's "
Deer in the Headlights" moment:
Obama: I just described what my plan is. And I'm happy to talk to you, Joe, too, if you're out there. Here's your fine -- zero. You won't pay a fine, because...
McCain (incredulous): Zero?!? [Deer in Headlights Look]
Obama: Zero, because as I said in our last debate and I'll repeat, John, I exempt small businesses from the requirement for large businesses that can afford to provide health care to their employees, but are not doing it.
But the debate was only part of the story. Here's what you may not have heard:
- Joe is not even a licensed plumber.
- Joe never completed an apprenticeship and does not belong to the plumber's union.
- He's employee number two in a two person company.
- A plumber's median salary is $42K... How can he afford buying a $250K profitable business?
- By the way: Joe the Plumber has unpaid property taxes of $1100
But let's dig in a little deeper. Assume Joe the Plumber
is in a position to buy out his boss (let's say he inherited a sum of money)... Obama's tax plan applies to income... So he'd have to
earn more than $250K/year, not spend it on buying a company.
For a company worth buying at $250K, that kind of valuation implies (at 1x-2x revenues) $125-$250K a year in earnings. If I had a business pulling in $250K doing plumbing, and a median licensed plumber earns $42K, I could hire two licensed plumbers, an accountant and an office manager, goof off all day and bring in $80K-90K a year (minus expenses). Why would I ever sell that to one of my employees for $250K? Answer: I wouldn't. So the answer is that revenues are probably a lot closer to $125K/year than $250K/year.
At $125K a year, I could afford a dim-wit, unlicensed plumber's assistant at $35K a year, I could afford to pay myself maybe 30% over median ($56K/year) or $91K/year in salaries, so long as I keep my expenses and costs of doing business at under $34K/year.
At that rate, an Obama tax plan looks really, really attractive, both for me, and my employee. Shoot, even if my employee won the lottery and decided to buy me out at $250K, the company is only bringing in $125K/year, and paying two employees salaries that are well below the $250K threshhold where Obama's plan starts to cost me more than I pay in taxes today.
Even then... If you can make $250K as a plumbing contractor
in this housing market I would be ecstatic to pay $900 more in taxes under an Obama presidency, because if I'm pulling in $280K per year, I wouldn't exactly call that "hurting". In fact, when unemployment is at unprecedented levels in years, and retirement plans at fractions of their value, I'd be counting my lucky stars that I'm paying taxes on $280K/year.
But let's call a spade a spade. If Joe the (not quite a) Plumber, can't afford to pay his property taxes, how can he buy a profitable plumbing business from his boss? How can he stay in business if, by buying out his boss, there are no licensed plumbers working for this company anymore? And if buying this company is going to result in higher taxes, we're back to the fact that now the boss is making more than $250K/year.
The story just doesn't make sense. It sounds like a half-witted half-thought-out concocted scenario that some Joe made up while playing football with his son when Barack Obama came walking by. He happened to hear some conservative TV or Radio show that misrepresented Obama's tax plan, and decided that if he presented the situation as if he was going to buy his boss' business for $250K that surely that would mean his taxes would go up.
Instead of trying (and failing) to pull a "Gotcha!" on Barack, Joe ought to go and get a plumbing license, and pay his back taxes. Then we can take a look at how he's going to buy out what appears to be his bosses extremely profitable plumbing business... once we figure out how a guy who probably makes less than $40K/year (again: median pay for licensed, apprenticed, unionized plumbers is $42K/year) could conceivably have $250K in cash burning a hole in his pocket in this housing market...
URL: loser_yeah_right@gmail.com
Title: auto insurance
Comment/Excerpt: Hey Thanks for the great information! here's some good resource for car insurance quotes and rate comparison which helped me to find good rates. http://www.example.com/ they give you the best rates from lots of local providers
Name/Blog: Khan
URL:
Title: auto insurance
Comment/Excerpt: Hey, You're Welcome! What information did you think was great? That I was struck by some other driver, or my use of the word "Moron"? Do you really think that hanging your spam off my blog posts is going to get you any business? And as far as insurance is concerned, why would I want some fly-by-night "local provider"? I'm all for doing business with the small guy, but when it comes to auto insurance, I want a top tier insurance company I know is going to stay in business, that has a 24-hour claim line, and deep enough pockets to pay off the maximum allowed by my policy so that if I rear-end a Ferrari, I'm not going to have to declare bankruptcy because they went after me since my insurance company was insolvent.