Thursday, October 16, 2008

Joe the Plumber can't afford $600 in tax - Part 2

Last night I posted about the silly notion that Joe can't afford to buy a $250K business because of a $600 tax increase.

Now I've found an interview Joe did with Fox News. In this interview, he states that he's middle class too...that the houses in his neighborhood range in price from $90K to $140K. Joe says that after he buys the business, he'll be staying put in his house because he can't afford to buy more.

What the hell is Joe talking about? If you can't afford more than a $140K house on a $270K income, then things are way more wrong than I thought yesterday. Let just use some outrageously conservative estimates to look at this, to see just how ridiculous this is.

Joe earns $270K. Let assume that his total overall taxation is 50% of his income. That means his take home will be $135K. Now, lets assume that Joe sets aside a very healthy $30K each year for retirement. He's now got $105K. That $105K has to cover both his mortgage and his living expenses.

So let's think about this. Lets assume that Joe was irresponsible and cashed out his home, and owes the full $140K on his mortgage. Heck, no...let's go further and assume his house WAS valued at almost twice that value pre-housing-crash (lets say $240K) and that he irresponsibly cashed out every penny of equity. Lets also assume his credit wasn't too hot, and that he was only able to score an 8% mortgage.

With those figures, Joe can have his house paid off in only 5 years by paying $4866.34. That's less than $60K per year. If we take that off of his $105K available, that means after paying taxes, after saving a huge amount for retirement, and after paying enough to eliminate his mortgage in 5 years, Joe STILL has over $45K available to live off of. That's almost what most middle class people make BEFORE taxes, retirement, and mortgage.

Again, remember how conservative I'm being here. His combined taxes will be less than 50%, without doubt. His mortgage is most likely less than 8%, and he most likely doesn't owe $240K on his house. He will most likely not contribute $30K to retirement, and he will most likely keep his mortgage a lot longer than 5 years. Most likely Joe will have something like $100K left over after taxes, mortgage, and retirement.

So now, I can only come to one conclusion. If you can't do much better with that amount of money left over to live off of, and if that $600 additional tax is going to make it impossible for you to buy that! That's all I can say, just wow! You have to be absolutely TERRIBLE at financial management to not be able to live quite comfortably off of that.

The only other explanation is that this guy has been seriously mistaken or misled about just how much he's gonna be hurting under Obama's plan.

Wednesday, October 15, 2008

Joe the Plumber can't afford a $250K business because of $600 in tax?

Tonight during the debate, Joe the Plumber became a topic more often than I cared to hear. The part of it that really sounded absurd was the notion of Joe can't afford to buy the business because of the increase in taxes.

During the discussion between Joe the Plumber and Obama, Joe mentioned that the business makes about $270K per year. As Obama stated, the first $250K would stay the same. It is only the additional $20K or so that would be taxed at a rate 3% higher. If you figure that out, a 3% increase on $20K comes to $600.

So let me get this straight. You may not be able to afford to buy a $270K business because of a $600 tax increase? If that's the case, something is really wrong in the financial management here. If you can't handle a tax increase of 0.2% (which is how much $600 on $270K works out to)...if that's the deal breaker for you, then I've got news to give you. Something else has gone WAY wrong, and that something else is obviously the deal breaker.

In addition, as Obama mentioned, that $600 may be more than offset by Obama's other credits for health care expenses and capital gains reductions. (Edit: Not to mentioned the possibility of increased revenue as his customers have more money to spend due to their tax decreases)

Thursday, October 2, 2008

I'm not electing a Vice-Debater

Tonight in the VP debates, Palin proved that she can be an excellent debater. She did a great job. I'll admit I was disappointed not to see a train wreck there. I nearly popped up a bowl of popcorn in anticipation of an evening of comedy. I didn't get that. Palin put on a respectable performance, and anyone just seeing how well she talked had to be impressed.

However, when I go to the polls in November, I won't be electing a Vice-Debater. I'm electing a Vice-President, and that's an area she fell far short. A good debater knows how to completely change the topic when it's something they don't have a good answer to, and that's what Palin did. However, the goal wasn't to see how well she could talk without getting tripped up. The point was (at least to me) to see how well specific questions could be answered (which she completely failed to do on MANY occasions). Otherwise, why even bother having questions? Why not just a 90 minute free for all chat?

The point was to flesh out each candidate and see what they are made of...see how they will hold up to a variety of measures of their job as vice president (and more importantly, their potential future job as the actual president). It's really no surprise that Biden crushed her on those grounds. Considering the backgrounds, I'd expect nothing less. But to tone this down to the least common denominator, as everyone seems to be doing, and see who won on that measure? Well, to me that reminds me of no-child-left-behind, commonly referred to as no-child-gets-ahead. By putting so much value on how Biden measured up (or rather, down) to Palin's level of ability completely disregards the fact that his abilities are so much greater.