Quote Originally Posted by IAmKowalski
You don't understand: It's a higher rate (3% higher) on income above $250,000.00 not a higher rate on every dollar earned by people earning over $250,000.00/year... get it?

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While this income would put Mr. Wurzelbacher above the threshold where he could expect to pay higher taxes under Senator Obama's tax plan, the increase in his tax bill would be relatively modest. Under Senator Obama's plan, the tax on income above $250,000 would increase by 3 percentage points from 33 percent to 36 percent. This means that Mr. Wurzelbacher could expect to see his tax bill rise by between $0-$900, assuming that this plumbing business would be his entire taxable income. If he has additional taxable income, then he would see a larger increase in his taxes.
Fine.. let's use your equation for someone who makes slightly more than 250k.. we'll use 300k as this is a reasonable number (keep in mind some small businesses make millions and employee a handful of people with high salaries).

so 250k * 33% = 82500
50k * 36% = 18000

for a grand total of 100,500


under current tax rates that's a 1,500 difference.

Now in reality; your local corner store probably makes about 250k if it's in a busy area.. and you see this is not a very large business.

However another example of a small business that actually employs a number of people would be a small construction company.. which may have a revenue of 1 million..

so

250k * 33% = 82,500
750k * 36% = 270,000

Grand total of 352,500

vs

330k under current tax plans.

Keep in mind that it is very expensive to run a business. If you've ever run one then you can attest to how rapidly the costs add up; in addition you need a money buffer in case of emergencies. Enough to be able to last you through at least 1 year of business.

There are certain write offs; but fact is that the amount of tax goes up exponentially. Believe it or not a LARGE portion of small businesses make beyond the 250k mark.