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Last Post:
Feb 12, 2010 4:15 AM
by: elfsplace
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8,187
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Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 11:05 AM
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Obama is on the air right now.
Just heard him say that one thing we can all agree on is eliminating capital gains taxes for small businesses - or words to that effect.
Guess what, Barry O? Small businesses seldom pay capital gains taxes - except perhaps, when they sell their entire business.
Small businesses, for the most part, either buy and sell inventory items, or provide personal services - they pay ordinary income taxes on that income.
Question - Is he that stupid? Or, does he think the American people are that stupid?
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Posts:
936
From:
Seattle
Registered:
5/25/08
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Re: Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 11:11 AM
in response to:
thebookguys3
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Exactly. This is bizarre. Small businesses don't pay much if any capital gains tax, which is a tax on the difference between what you paid for a tangible investment (such as a stock or gold or a house) and what you sell it for.
Small businesses don't use their capital to buy investment grade assets. They don't have enough capital to do this. They spend what little capital they have on things like labor, equipment, rent, and, of course, things like payroll and L&I taxes.
A capital gains tax cut will not help small business with any of these expenses. On the other hand, a payroll tax cut would. But that will never happen.
Either Obama knows little about small business, or he knows little about the capital gains tax.
Message was edited by:
davido84
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8,187
Registered:
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Re: Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 11:16 AM
in response to:
davido84
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I think he's counting on the fact that the dumb masses know nothing about economics, and less about business and capital gains.
After all, he got elected by appealing to ignorance.
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Posts:
3,121
Registered:
8/11/06
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Re: Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 11:22 AM
in response to:
davido84
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Many "small businesses" aren't what we'd refer to as small. The SBA defines a retail trade business as "small" if their revenue is under $7,000,000.
If you are tired of getting screwed by the self-employment tax, create an S-corp or LLC filing S-status. You'll save a lot in taxes if you structure it properly. You will lose out when it comes to social security, but who knows what the tax system will be like when it comes time to retire...
My motto is if you can avoid or defer taxes, do it!
Message was edited by:
nextgen_gamer
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Posts:
936
From:
Seattle
Registered:
5/25/08
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Re: Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 11:23 AM
in response to:
thebookguys3
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<<I think he's counting on the fact that the dumb masses know nothing about economics>>
To paraphrase an old saying, the problem is not what the masses know about economics, it's what they know that ain't so. 
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Posts:
14,257
From:
Within sight of beautiful downtown Tijuana
Registered:
2/8/06
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Re: Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 11:27 AM
in response to:
thebookguys3
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Capital Gains is a BS tax anyway. Why should one legal way of making an income be treated differently that any other one? All it does is discourage small investors from buying stock. The big shots have all sorts of loopholes to get around it. The result is that what was supposed to be a tax on the rich becomes another tax on the middle class.
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Posts:
652
Registered:
11/20/09
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Re: Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 11:29 AM
in response to:
davido84
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He's using the SBA's definition of a small business. That's the same definition the rest of the world uses too. This is nothing new guys, he campaigned on it. And furthermore, small business no matter what the definition, do often pat capital gains taxes.
Small businesses invest in larger corporations that benefit them, and their stocks when sold count as capital gains. Do you all follow so far? How about an example.
A local Seafood restaurant invests in a large, publicly traded Fishery. They scratch each others backs, but the small business pays taxes for that transaction. Obama's "TAX CUT's" making it so the smaller guys don't pay 10-33% for that same benefit the larger companies get from people investing in them.
I lost you all again didn't I?
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6,246
Registered:
10/20/08
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Re: Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 11:29 AM
in response to:
thebookguys3
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Small businesses who decide to invest their profits in assets which are not necessary for running their business - like stocks ad bonds, will not pay capital gains. Another incentive not to use the assets to invest or create jobs.
Example, small profitable business needs a new lathe, invest the cash in stock, take out a loan. Deduct the interest, no capital gains tax when you sell the stock. Win twice on your tax bill. Improve productivity of your existing workers. No new jobs.
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Posts:
936
From:
Seattle
Registered:
5/25/08
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Re: Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 11:35 AM
in response to:
lakewoodassocia...
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<<Small businesses who decide to invest their profits in assets which are not necessary for running their business - like stocks ad bonds, will not pay capital gains. Another incentive not to use the assets to invest or create jobs.>>
Good point. All taxes influence behavior in ways that are not always intended.
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Posts:
6,246
Registered:
10/20/08
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Re: Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 11:47 AM
in response to:
davido84
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Usually the effects of tax policy are predictable and ignored by politicians.
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Posts:
6,246
Registered:
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Re: Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 11:52 AM
in response to:
proudleft
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As is often the case, your argument makes no sense.
The publicly traded fishery has little freedom to "scratch the backs" of any of their customers. We have anti-trust laws to deny favorable pricing to certain customers. Every customer purchasing in the same volume is required to receive the same pricing under the law.
Buying equity in a supplier only makes sense if its a good investment. Its no different from buying equity in another good investment, it takes capital out of the small business. DOESN'T CREATE ANY JOBS for the small business.
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Posts:
3,854
Registered:
2/8/06
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Re: Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 12:28 PM
in response to:
thebookguys3
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Oh he's so very shrewd. He's pretending to help the little guy and those (the majority of citizens) who don't understand tax law think he's actually reducing the tax burden on the little guy! He's a politician!
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Posts:
3,417
Registered:
11/8/07
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Re: Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 12:34 PM
in response to:
proudleft
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A local Seafood restaurant invests in a large, publicly traded Fishery I doubt you have real restaurant experience, probably just a job at Mickey Dees while in school. With the low margins in effect, small businesses rarely have free capital to buy stocks - which I believe is still limited in total dollar value by law.
A much better idea to promote small business, and get it off the ground, it to defer all government business fees for the first two years. Those of you who have actually started b&m businesses know that some gov. agency or dept has its hand out for a permit fee, a license fee, etc
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Posts:
8,187
Registered:
11/11/07
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Re: Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 12:37 PM
in response to:
secretcodex
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For reasons I never quite understood, our county stopped issuing occupational licenses about three years ago. Go figure. Surely they raised fees somewhere else.
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Posts:
8,187
Registered:
11/11/07
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Re: Eliminate Capital Gains taxes for Small Business?
Posted:
Feb 9, 2010 12:40 PM
in response to:
proudleft
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And furthermore, small business no matter what the definition, do often pat capital gains taxes
If they do, it would be a) an extremely rare thing and b) a miniscule portion of their tax obligation - unless the business was started for the purpose of investing in real estate or some other capital asset.
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