Joe the Plumber

Who should "Joe the Plumber" be voting for on election day?

A big deal has been made about this guy who McCain brought up during the third presidential debate. McCain is attempting to say that Obama is going to raise taxes on this poor plumber; that Obama is going to take away his hard-earned money and "spread his wealth around".

But it's all a lot of nonsense. Here's why:

1) First of all, the real Joe reportedly earns about $40,000 a year. He would be much better off financially under Obama’s tax plan.

2) Joe is thinking of buying a business that is valued at around $250,000. The value of any business is always far greater than its annual revenues, because the value takes into account potential for future growth and profit. In this case, tax records show that this business did around $100,000 in revenues last year. The actual taxable income would have been even less. So even after buying the business, Joe would be much better off under Obama’s plan.

3) Let’s assume that Joe turns out to be a business genius, and actually grows the business to where its taxable income exceeds $250,000 a year. Here’s how the tax would work. Let’s say Joe manages to earn a taxable profit of $280,000 in a given year (a number given by Joe, which seems like a really big "if"). Obama’s tax increase would only affect the amount in excess of $250,000, or in this case, $30,000. That portion would have the tax rate increased from the current 36% all the way up to … 39%. Yes that's right, an increase of 3%. So on his total profit of $280,000, he would see an increase in his taxes of only $900. (And that increase would likely be more than offset by various tax credits that Obama’s plan proposes specifically to help small business owners.)

Not factored into any of this is the idea that, since most middle-class families will see their taxes either stay the same or decrease under Obama's plan, they will have more money to spend on plumbers. Joe’s business will be doing much better.

CNN's financial analysts concluded that fewer than 2% of small businesses would pay higher taxes under Obama's plan. McCain is once again falsely trying to convince voters – including small business owners – that they would somehow be better off under his tax plans. They would not. Joe and others like him will be cutting off their noses to spite their face if they vote McCain.

Sources:

• CNNMoney.com: Fact-Check: Plumber Joe's Taxes
• Factcheck.org: Fact-Checking Debate # 3
• Factcheck.org: Obama's Welfare