October 16th, 2008
12:00 PM ET
14 years ago

Fact check: Plumber Joe's taxes

[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2008/images/10/16/art.joe.cnn.jpg caption="How would Obama's tax plan actually affect Joe's taxes."]McCain has entrepreneurs spooked about widespread tax hikes, but fewer than 2% of small-business owners would pay more under Obama's plan.

(CNNMoney.com) - In speech after speech, presidential candidate John McCain hammers on the claim that his rival Barack Obama will raise taxes on many small businesses.

At the debate on Wednesday night, McCain said, "The small businesses that we're talking about would receive an increase in their taxes right now."

More typically he has said: "What [Obama] hasn't told you is that he would tax half of the income of small businesses in America," a line used in La Crosse, Wisc., last week.

Should small business owners fear for their wallets if Obama is elected? Not the vast majority, business and tax experts say.

To make its claim, according to a McCain spokesman, the campaign counts as a small-business owner any taxpayer who files a Schedule C, E or F – the forms used to report gains and losses from business ventures and farms.

Using that definition and citing IRS data, the campaign notes that "56.8% of total small business income is earned by businesses in the top two rates, which Barack Obama has pledged to raise."

It's true that Obama has proposed raising taxes on the top two income rates.

But there are three main problems with McCain's charge.

Full story from CNNMoney.com

soundoff (517 Responses)
  1. bill

    joe the plumber.if you dont want your name thrown around.then dont let lieig mcbush use it if he used my name iwould sue the liar JOE THE PLUMER YOU ARE JUDGED BY THE COMPANY YOU KEEP

    October 16, 2008 02:51 pm at 2:51 pm |
  2. Greg

    I really don't want another President that can't pronounce words or put together a rational thought before speaking. We heard the same thing from Bush 8 years ago and look how well that worked out. I'm also getting sick of hearing the word "maverick". I mean really, everyone is some kind of political "maverick" these days. Constantly saying that you cross party lines to work together and that you have been fighting against every single bad thing that Bush has done is ridiculous. Apparently all the "fighting" that John McCain has done in the past 8 years hasn't been worth a thing, or it's just not true.

    Also, being from Ohio I'd like to apologize on behalf of "Joe the Plumber". Although I'm not sure he was a plant by McCain, he sure sounds like it. Look, you make more money, you pay more taxes, that's how it is. I know not everyone agrees with it but too bad, move to another country if you're so appalled by the idea. I love the objection of rich businessmen to paying more taxes when they've risen to the top of corporate ladders on the backs of others, not their own merits.

    I'm not really sure if it matters who is elected next month, which is very sad. At least I won't have to listen to any more smear tactics, finger pointing and back stabbing for a while.

    October 16, 2008 02:51 pm at 2:51 pm |
  3. CLINTON

    THINK IT WOULD BE A BIT BETTER IF OBAMA WINS THE PRESIDENCY BUT NOT MUCH BECAUSE HE'S STILL AN "INEXPERIENCED BOY", MCGRAMPA MIGHT RUIN THINGS MORE THAN THEY ARE, STILL, DAMAGE IS DONE, MARKETS ARE ON THE BASEMENT AGAIN

    October 16, 2008 02:52 pm at 2:52 pm |
  4. james

    Have you forgotten the National Chamber of Commerce supports Obama/Biden and said so nationally not too long ago ?????

    October 16, 2008 02:52 pm at 2:52 pm |
  5. Larry

    When did Bruce Willis change his name to Joe and become a plumber?

    October 16, 2008 02:52 pm at 2:52 pm |
  6. Dawna, Co

    This is for Sweetie who hates the tax and spend philosophy, When your house burns down or you're robbed and the Fire department and police department (paid for by your taxes) aren't there to help or your child is not allowed to go to school because there's no money to pay the teachers or turn the lights on in your(paid for by your taxes) school, and people start invading this country because there are no armed services (paid for by your taxes) I'm sure you will be the first to complain.

    October 16, 2008 02:52 pm at 2:52 pm |
  7. Dan

    More Republican lies. How tiresome.

    October 16, 2008 02:54 pm at 2:54 pm |
  8. Independent now voting for Obama-Biden

    Ughhhhh, McCain can you please stop with the lies? And you call yourself a god fearing Christian. And Joe, if you make $250k as a plumber then I wasted six years in college and grad school. You are a plant obviously. I know lots of small business owners and they don't gross over quarter of a million.

    Can we now please get back to job creation, health care, banking and financial regulation??

    October 16, 2008 02:55 pm at 2:55 pm |
  9. Another Republican for Obama

    Taxes are paid on NET PROFIT, not gross profit.

    Therefore, at a tax rate of 10%, Joe The Plumber's business will have to make $2.5M to NET $250K in profit.

    What is he using, platinum pipes for McCain's 8 houses????

    October 16, 2008 02:55 pm at 2:55 pm |
  10. Melissa

    Why doesn't anyone get this?
    All of us middle income people have been paying too much tax for the last 8 years, so why would you want to keep paying that. Under Obama's plan you will get more money from your paycheck.
    Is it because the Republicans have you brainwashed? The rich are paying very little in taxes as we speak and they want to keep that going forever. You think they care about people who make $50,000 a year and their paying more taxes? They only care about what their going to get. McCain has 13 cars and 8 houses. He doesn't want to pay more taxes along with his special interests and his favorite cronies!
    Wake up America! Don't be fooled by greedy Mr. McCain. He didn't even vote for children getting health insurance. Last night he mentions "precious children," face it, he doesn't care about anyone but his greedy self and his gov't Republican friends!

    October 16, 2008 02:55 pm at 2:55 pm |
  11. Charlotte

    We all know self-employed and small business lie about their income. They get to write off every little thing they spend. They go out to dinner with friends and write it off a business expenses. They write off cell phones that are used for personal calls more then business calls.. They don't report cash payments either. So they appear to make less when they write off everything under the sun. If you believe either of these candidates can cut taxes, look at the deficit and ask yourself how?

    October 16, 2008 02:56 pm at 2:56 pm |
  12. Casey Hendriks

    Same tactic, different dude spouting it!
    Most of American's have lived in fear the past 8 years, Mr. McCain wants to continue that! Get scared! Fear Obama because of what he's going to do to you, your family and our "great nation".
    Here is some news for you John, the country hasn't been great for a long time.
    John McCain sounds more like a fox news broadcast. Push fear and have nothing substantial to back it up with.
    If Obama does not win the white house, more and more people of the world will realize just how dumb people in America actually are!

    October 16, 2008 02:57 pm at 2:57 pm |
  13. Reality Check Richmond Virginia

    yeah, Joe the Plumber(who isn't really a plumber) is going to find the pot of gold at the end of a rainbow which allows him to buy a plumbing business that profits over $250,000 a year. What a joke. I guess I'm in the same boat if I win the lottery.

    October 16, 2008 03:00 pm at 3:00 pm |
  14. Jacob, Portland

    Joe the Plumber is related to Charles Keating.

    OOPS!

    October 16, 2008 03:01 pm at 3:01 pm |
  15. does not work

    It seems to me that businesses and corprate america have already got there tax break to the tune of 2.5 trillion of taxpayer money in the last month. So it would also seem fair that they should pay a little more in taxes the next decade. By the way if you call Obama a socialist because he wants to "share the wealth" then after what the Bush administration did in the last month should be called Communism.

    October 16, 2008 03:01 pm at 3:01 pm |
  16. Jason

    NEWS ALERT! NEWS ALERT! Joe the Plumber and his partner aren't even licensed to do plumbing.

    It has just come out in the news that neither Joe the Plumber form Holland, OH nor his business partner Al – from whom he wishes to buy the business from – are NOT EVEN LICENSED to do plumbing work in their area.

    This should be fun to watch them wriggle. Now he can look forward to getting his license for the next few months through the city/state.

    October 16, 2008 03:01 pm at 3:01 pm |
  17. Pamela Arauz, M.B.A.

    Does 'Joe the plumber' know the difference between Revenue and Profit?

    On October 12 in Ohio, Senator Obama mistakenly used the term revenue when referring to profit. In the U.S., income taxes are paid on profit not revenue.

    So, if the business you work for is already making a profit of $250K, you are making really good money. That means your annual could be well above $250K, many of your own workers are making good money, you have already paid your direct costs, overhead (salaries, office expenses, rent, etc.) and you still have a profit of $250K. And based on that profit (not revenue) is what you are going to pay taxes on.

    I am curious, what's the revenue of this company that Joe wants to buy? And much is he going to pay for it?

    October 16, 2008 03:02 pm at 3:02 pm |
  18. Rob R

    If you read the whole story here, you will realize that McCain's claims are outlandish. McCain is lumping in everyone who files Schedule C,D, or F on their tax returns as small business. But as the story points out both Obama and McCain file Schedule C because of royalties on their book sales – and they are certainly not small business owners.

    Secondly, the amount of tax that would increase would be the residual amount over the threshold – Obama wants to up the top bracket from 33% to 36% – so the money that is earned up to that threshold stays the same – its the OVERAGE that gets taxed higher – NOT THE ENTIRE 250K.

    Lastly, when you factor in the deductions for business expenses and all, the amount of businesses that would have a taxable income of $250,000 or more is within the top 2% of businesses.

    Plus, Obama is offering a credit for each new job created – so there are tax breaks for small businesses.

    Bottom line, the Republicans and John McCain are trying to use typical Republican scare tactics into making people believe that Obama is going to tax the hell out of everyone. He's not. Most people do not take in more than 250K and will see better tax relief.

    If you do make 250K, then you should be able to pay a little more taxes and still live a very comfortable life. If you can't, then its your own fault for not managing your money better.

    The Bush tax cuts along with ridiculous spending by the Republicans is a major reason we are where we are, and if we are to truly get off foreign oil and rebuild the healthcare system, its going to take money. Obama is not trying to steal your money – he feels that if you make a lot more money you are in better position to help the economy grow.

    I currently earn $120,000 a year and live comfortably. If I made DOUBLE that amount, I'd be extremely comfortable and would gladly pay slightly more in taxes knowing that I would be helping the economy and still able to maintain a good lifestyle.

    October 16, 2008 03:02 pm at 3:02 pm |
  19. Sam in Orlando

    Bottom line, if you're raking in a quarter-million you should pay higher taxes... I don't care if you're getting it picking up trash, fixing pipes, or breaking bricks.

    October 16, 2008 03:03 pm at 3:03 pm |
  20. Ann C

    Oh no not more Joe.....could Joe be a plant? Joe a Republican...just happens to go out and talk to Obama....McCain just happens to pick up on Joe. Oh no said it ain't so Joe.

    October 16, 2008 03:04 pm at 3:04 pm |
  21. Emily, Morris Plains NJ

    Okay Ken, you said:

    "it seems to me that everyone is missing the point that McCain was making, and that is that if Obama is elected, your taxes will end up going up. How else do you think that he is going to pay for all of the promises to the American people he made."

    Then answer this question for me. How is McCain going to afford all of his tax CUTS? We are already a zillion dollars in debt, how are we to pay that back, or start paying it back, and have tax cuts? Would you like our county to continue borrowing from China? What's wrong with doing something for AMERICA for a change?!

    October 16, 2008 03:04 pm at 3:04 pm |
  22. Lynn

    WAKE UP AMERICA.. IF OBAMA IS ELECTED WE ARE GOING TO SEE AMERICA WORSE THAN EVER BEFORE>>

    October 16, 2008 03:04 pm at 3:04 pm |
  23. JL

    To "CONFUSED" Is the tax plan for 250,000 net pay or gross pay???????????????????/ anyone know

    LOL!! If it wouldn't be 'net pay' then would it?

    October 16, 2008 03:06 pm at 3:06 pm |
  24. jayel

    joe the plumber. lucky dog, you got a business making $250,000 a year. Smile and pay your taxes, geez you are making more money than most people in this country. Plus you must have made a few bucks more doing your thing to discredit Obama's tax plan.

    October 16, 2008 03:07 pm at 3:07 pm |
  25. Manam

    Mccain campaign is making calls to people in Virginia and leaving messages about Obama involved in terrorist activities to scare people.

    HOW DESPERATE IS REPUBLICAN PARTY! SHAMEFUL.

    October 16, 2008 03:08 pm at 3:08 pm |
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