Forget "Joe the Plumber," the Ohio pipelayer whose stance on taxes became a major talking point during the final presidential debate. We rounded up a panel of other entrepreneurial Joes across America, to get their take on the candidates' tax plans, the true definition of wealthy, and whether businesses should pay more to Uncle Sam.
Joe the Plumber, meet Joe the Builder. And Joe the IT Consultant. And Joe the Trailer Hitch Maker.
They're just a few of the countless small-business owners who watched last night's presidential debate, which introduced America to Joe Wurzelbacher, an Ohio plumber who had confronted Sen. Barack Obama over his proposed tax plan at a rally earlier in the week. According to Wurzelbacher, whose story dominated the debate, the Democratic nominee's plan to raise the tax rate on people earning more than $250,000 a year would hinder his "American dream."
Republican John McCain seized on the story as an example of what small-business owners really think about Obama's tax strategies.
"What you want to do to Joe the plumber and millions more like him is have their taxes increased and not be able to realize the American dream of owning their own business," McCain said to Obama during the debate, while vowing that his plan would keep taxes low for small-business owners.
According to Obama, 97 percent wouldn't be touched. Indeed, statistically speaking, most small businesses make less than $250,000 in net income after expenses, according to Small Business Administration's Office of Advocacy and the Tax Policy Center. What's unclear is how many of these are home-based businesses without employees, and how many are employer firms that create most of the new jobs the candidates tout on the campaign trail. How would they be impacted by Obama's tax plan? Like Wurzelbacher, would higher taxes derail their entrepreneurial plans?
We put those questions to business owners from a range of industries, from a trailer hitch maker to a long-distance phone company. They all have one thing in common, though. They all happened to be named Joe.
What do you think of Sen. Obama's plan to raise rates on small businesses with taxable income higher than $250,000 a year?
Joe McMahon, co-owner and president of Audubon Machinery, a North Tonawanda, N.Y.-based laboratory equipment maker: I think John McCain should have asked Obama if he knows what a K-1 form is and how it's used. My bet is that all he would have gotten back was a dumb look. Most of the small businesses I know of are setup as Subchapter S corporations, so the profit of the business flows through the tax return of the owner as "Income." I own and run a small business. We have about 45 people employed and a top line of about $8,000,000 in sales. I pay myself a salary of $130,000 and at the end of the year, my partners and I will divide and claim the profit from our business as income. We will only actually take enough out in the form of a distribution to cover the taxes and keep the rest in the business to continue to fund our growth. A bigger slice for taxes means less fuel for growth, fewer new jobs created, etc.
Joe Works, co-founder of Humboldt, Kan.-based B&W Trailer Hitches: I am generally opposed to raising taxes at any time for any reason beyond the very high current levels. Our government should become less intrusive into our lives, and should be less wasteful and inefficient. As a small-business owner earning more than $250,000 per year, I feel like taxes today are already stifling to small-business growth and future health. Small businesses are the backbone of this economy, and I do not think it is right for the government to decide that its role will be to redistribute my earning to whomever they decide.
Joe Oster, president of Structured Technologies, a Rochester, N.Y.-based IT services firm: It sucks. Totally.
Joe Zarrett, president and founding partner of Verndale, a Boston-based Web consulting firm: I'd begrudgingly accept the additional tax burden on the condition that it is bound to the health tax credit, zero capital gains, and expanded loan programs that represent the cumulative Obama/Biden agenda for small business. If I were evaluating the tax increase on its own merit, I'd have the same reservations as our new friend 'Joe the Plumber' in Ohio. However, if you examine Obama's entire plan for small business, it could be argued that our additional tax burden may likely be offset by reduced health-care costs and an increase in revenue brought about by additional capital availability and growth amongst the small businesses and venture backed start ups that are our customers.
Joe Mattausch, founder and president of TC3 Telecom, an Adrian, Mich.-based long-distance phone company: I think Sen. Obama is trying to leverage the perception that $250,000 represents the concept of "wealthy." People who have owned even a small company will realize how easy it can be to achieve this income, and yet still live a mediocre life style. Sen. Obama, like most Democrats, seems to consistently fail to recognize that what is necessary is less spending, and not more taxes.
Joe Albanese, founder and CEO of Commodore Builders, a Newton, Mass.-based general contractor: While many, many sole proprietorships will be below the $250,000 per year threshold, I personally believe that the small businesses that are the backbone and fuel of our economy have a dedicated employee base, whether it is 10 employees or 200 employees. A significant number of these businesses make significantly more than $250,000 per year. The profits of these businesses are an essential reinvestment to capitalize the business and fuel its development and long term stability. These businesses will be taxed more, and the employees will be hurt. Salaries and bonuses will be impacted by this plan.
How would the plan impact your business?
Joe McMahon: It would certainly restrict the rate at which we could grow.
