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. Ann

    You missed the point. Whether Joe the plumber will or not be affected is secondary. The point is that Obama said he will "spread the wealth around". This is communism, stupid!

    October 16, 2008 12:55 pm at 12:55 pm |
  2. RG

    This is very clear. McCain is basing his accusations on his general perspective of a small business. What is wrong with you people? Read and do your research first! If Obama was Republican and McCain had been a Democrat, I would still vote for Obama. He is just the best person for the job. Think of what's best for the country. I am a first time voter for Barack Obama!

    October 16, 2008 12:55 pm at 12:55 pm |
  3. REG in AZ

    You had to wonder if some of the TV commentators, Pat Buchanan for one and several others, were actually watching some other debate (or just totally incapable of any objectivity) as was substantiated when the public’s reactions came in. John McCain seemed very un-presidential as being nervous and even angry, as if on the verge of losing it at any moment. While Barack Obama seemed totally presidential as being calm and engagingly pertinent the whole time. The contrast was that McCain seemed totally stressed to make his political points and criticisms, while Obama impressed as genuinely directing himself to the people and to the issues important to the people. There wasn’t any doubt that Barack won the debate and that he came across as the better choice for president, in fact it wasn’t even close.

    October 16, 2008 12:55 pm at 12:55 pm |
  4. Frank from Peterborough

    Give senator McCain a break he has already stated he doesn't know anything about the economy and his financial adviser Phil Gramm has told him the country is a bunch of whiners and only in a mental recession.

    It is possible Senator McCain won't have to put Phil Gramm in charge of his economic policies since maybe Bush's economists would agree to stay on and keep the ship at an even keel.

    October 16, 2008 12:55 pm at 12:55 pm |
  5. Hillary supporter!

    Um, plumbers charge an arm and a leg. What's he complaining about? They should have focused on those of us who have to "pay" Joe the Plumber! Some of us have to go borrow the money to pay Joe. Besides anyone who makes that kind of money and/or can afford to own 7 houses CAN NOT identify with the middle and low income people. Do they really know who to make $25 last until the end of the month? Do they? Quit taxes the heck out of people with little checks and maybe we will have money left over at the end of the month.

    October 16, 2008 12:56 pm at 12:56 pm |
  6. J.M.

    I saw the interview with "Joe the Plumber" on the Today show this morning. It was said that Joe did not disclose who he was voting for, but towards the end of his segment he made a comment that if Sen. McCain won he would get a few more minutes of fame and that if Sen. Obama won he would probably be just a footnote. Well I think it's obvious who this character is going for. Enough with guy already! But he doesn't even begin to represent the majority of people who continue to be disenfranchised and ignored in this country. I say to heck with this guy and on with the elections. If people believe that McCain has their best interest at heart, they are sadly mistaken. McCain is going around with this country first business, well apparent to me that was not the case when he chose Palin as his running mate.

    October 16, 2008 12:56 pm at 12:56 pm |
  7. Uncle Sam

    I hear continued calls to focus on the 'real' issues, such as the current economic crisis, and away from matters of character, judgment, and leadership.

    Why do you think we're in this crisis?

    October 16, 2008 12:56 pm at 12:56 pm |
  8. Women for Obama/Biden

    People kept including Pelosi, Reid into this campaign...If McCain want to run against those people let him come back when he his 80 yrs old maybe he will be smarter then. Republicans held the senate for 6 yrs out of the last 8 yrs...The never saw this problems coming. McCain claimed he warned the senate about Fm & FM 3 yrs ago. It was his Republican controlled senate that denied him and not Dems....Americans now know that the only time there was surplus in the last 28 yrs was when a Dem was president.

    October 16, 2008 12:57 pm at 12:57 pm |
  9. Cory

    DO you really BELIEVE that Obama will not raise your taxes? Democrats in the house and senate do want to raise your taxes.

    October 16, 2008 12:57 pm at 12:57 pm |
  10. Brad

    To those of you talking about poor Joe making $250,000 and how Obama's taxes will affect him, please read this entire article as it shows how Obama's plan will almost certainly not affect him. And, as a side note, to those making a quarter of a million dollars a year, sorry if I don't cry a river for you for having to pay a bit more in taxes.
    To the 'No Taxes' people in the world, all this tax cutting has brought us is failing schools and infrastructure. I don't like taxes either but I realize it's the price you pay for civilization.
    And to Shawn, your argument as stated is confusing to me. If Joe takes home $250,000 in a year, he isn't putting that into the company anyway, so how would lowering his personal taxes make him more likely to hire more people? If I am not mistaken, if he reinvests in his company with that money, he wouldn't be above that tax bracket and wouldn't have to pay the small amount of extra taxes anyway – so actually, he might be more likely to hire more people at good pay to keep himself just below that tax bracket. But I'm not an economist so I could be wrong and am willing to listen to your argument.
    'Trickle down' economics for 30 years has only widened the gap between rich and poor and has brought us more poverty – if it hasn't worked in 30+ years, it's probably not going to work!

    October 16, 2008 12:57 pm at 12:57 pm |
  11. AdamW

    Here is the reality.

    If you own a business that makes 250k a year and up and you are the sole employee than you ar eprobably personally earning enough to pay your taxes and live a great life so long as you ar enot a gluttoness American.

    If you have employees then you are not personally earning 250k so you wouldn't be in that tax bracket. On top of that neither would your employees so they would get breaks as well. On top of all that because you own a business in AMERICA you will get business tax breaks. So all in all you will be doing pretty well.

    Don't let McCain confuse you just because he repeats the same nonsense over and over.

    And let's be honest. Since when is "spreading the wealth around" such a dirty sentence?
    Seriously. Aren't these supposed to be good wholesome god loving Christians that are dedicated to helping their fellow man? In one breath they want these christian values and then in the next breat they want to be hardcore capitalists. The two don't work together- sorry.

    October 16, 2008 12:58 pm at 12:58 pm |
  12. Gary Belem

    If Joe the plumber makes $250,000 then I am pulling my kid out of college to send him to trade school, it will save me money and he can take care of Mom & Dad, if and when Dad can retire from his 25 year at the job making 58,000/YR. Joe's Mom & Dad must be so proud of him, he is for real right?

    October 16, 2008 12:58 pm at 12:58 pm |
  13. That one is Karl Marxs friend too

    If Barack Obama's goal as President is to 'spread the wealth around,' perhaps his unconditional meetings with Hugo Chavez, Raul Castro, and Kim Jong-Il aren't so crazy - if nothing else they can advise an Obama administration on economic policy

    It doesn't matter who Joe the plumber is- it matters what Obama said to him- He had every right to be there and ask the question. He got the answer he expected.

    Spread the wealth around.

    October 16, 2008 12:59 pm at 12:59 pm |
  14. np

    I'm glad to see you clearing up the misstatements about the % of small businesses that will be affected by a tax increase; however why doesn't CNN clarify for voters the opposite end of the spectrum– the "tax cuts" under the Obama plan that will be given to Americans who file tax returns but owe and pay NO taxes at all? Will these people actually get a welfare type of refund on top of having to pay no taxes?

    October 16, 2008 12:59 pm at 12:59 pm |
  15. History Guy

    To aby;

    actually our ancestors fled England because of religious intolerance (I wonder which party today is most often identified with religious intolerance?) The issue on taxes only came up when the colonies were not allowed to send representatives to parliament, but were still taxed. Finally, Obama's plan means less taxes for 95% of America. McCain's does not. If higher taxes are bad, then McCain's plan is worse than Obama's because it will mean higher taxes on more people.

    October 16, 2008 12:59 pm at 12:59 pm |
  16. Rich

    I think this just goes to show how out of touch McCain really is. He owns 7 houses, 13 cars and thinks "rich" is people who make $5 million a year or more. In John McCain's world, he probably thinks plumbers make $250,000 rather than $43,000 as the BLS reports. So, the kid behind the counter at McDonald's–oh he's making $100,000, the cashier at Walmart oh, I'd say about $150,000. That is why he just doesn't understand that Obama's plan cuts taxes on 95% of the people in this country. When you have a warped perception of what people earn, then it is easy to come to the errors that McCain keeps coming to.

    October 16, 2008 12:59 pm at 12:59 pm |
  17. Leonard

    Regarding Obama's Tax Cuts for the Wealthy, CNN just Factchecked Mccain's claims and what did they find? The bottom line: McCain's claim only works by using an overly broad definition of what counts as a "small business" – and even with that definition, fewer than 2% of business owners would be hit by Obama's proposed rate increase (493000 out of 35 million filers who are considered small businesses) . For those who are affected, the increase would be levied only on a part of their earnings, not all of them (only the part that exceeds the cutoff, for most people that translates into $1500 more in taxes or 3% extra). These were the conclusion drawn by independent studies published by the Tax Policy Center.

    October 16, 2008 12:59 pm at 12:59 pm |
  18. Mark Louisiana

    I'd rather have a president who put in "a PLANT" (and bye the way, Joe Plumber is a real guy...no lie...he lives right next door to me and he makes a lot less than 250K) than have a president who's FRIENDS with a TERRORIST or a CORRUPT organization like ACORN.

    Liberals...OUCH!

    CNN, thank you for publishing my previous comment, you pleasantly surprised me.

    October 16, 2008 01:01 pm at 1:01 pm |
  19. Cam

    So let me get this straight........a guy who DOESN'T own the small business says that he won't be able to buy it if Obama gets elected because he might make the business successful and be forced to pay more taxes.......RIIIIIIIIIIIIIGHT.....

    Okay, does anyone else hope this guy doesn`t buy the business considering he will obviously run it into the ground because of his stupidity......

    October 16, 2008 01:01 pm at 1:01 pm |
  20. CANADIAN CLUB

    ANOTHER CHEAP STUNT BY McCAIN AND HIS SORRY CAMPAIGN. JOE THE PLUMBER IS NOTHING MORE THAN A PHONY ORCHESTRATION, A CARNIVAL ACT. SHAME ON YOU McQUACK. BY THE WAY DID EVERYBODY SEE McQUACK'S ROLLING HIS EYES LAST NIGHT? JUST LIKE ROLLING DICE.... SNAKE EYES. HE WAS MADE UP LIKE A STIFF , EMBALMED, SMILING CADAVER. LIP ROUGE AND ALL.

    October 16, 2008 01:02 pm at 1:02 pm |
  21. JT

    I'm a small business owner and I was not impress with McCain pretending to look out for the small business owners. McCain was never worried about us until the Obama/Biden ticket started focusing on us in the first place. McCain tax plan is just to give more pillows and sheets to the the riches fat cats.

    October 16, 2008 01:02 pm at 1:02 pm |
  22. Phil in KC

    The truth can be so annoying when you're trying to make a point.....
    I'm glad Joe the Plumber is being taken care of – now what about the rest of us? Are we now going to campaign based on what you're going to do for one man?

    October 16, 2008 01:02 pm at 1:02 pm |
  23. Bob V

    I wanted to respond quickly to a comment about the last Joe The Plummer article, but the postings were closed. Username Genius All wrote that Joe the Plummer can only employ 5 employees at $50,000 per year before he is hurt by Obama's tax plan.
    Genius All, please get an education before you start posting mindless comments. Quick accounting lesson. Gross Receipts (Everything you take in) – Expenses (outlays of the business for production of income) = Net Income. Employees salaries are expenses which you take from the total money that you receive in order to determine your net income. Net income is what is taxed. If Joe made $1,000,000 in gross receipts and paid $800,000 of wages to employees the net income that he would be taxed on would be $200,000; below that $250,000 threshold that you are oh so worried about.
    Also on your flat tax idea, another uneducated comment. Do me a favor. Look at your paycheck, figure out exactly what you pay in federal income tax (don't add in 401K contributions, state taxes or any other taxes), take the total you pay in federal income taxes and subtract from that the money that you receive back in your refund. Take that number and figure it out as a percentage of your total salary. I'm willing to bet it's between 10 and 15%. Now go do some research on a flat sales tax and see the rate proposed if we were to have a flat tax. Flat tax advocates estimate a 20 to 25% sales tax should be implemented on everything you buy. For the average american paying 10 to 15% of thier wages for federal income tax this isn't a good idea. Why would you want to pay a higher tax rate? If you are in a very high income tax bracket then this would lower what you pay in taxes and be a good idea. Everyone has the right to views and opinions, but please make educated decisions before you start shooting things off that you heard from someone else.

    October 16, 2008 01:03 pm at 1:03 pm |
  24. Melissa

    People need to pay more attention to what Obama is actually saying. How many plumbers do you know that make over a quarter is a million a year?

    October 16, 2008 01:03 pm at 1:03 pm |
  25. Dadedi

    Joe the plumber, please vote for McCain. We the democrats do not need your vote. In fact your vote would just muddy the water. Please vote for McCain. Thanks
    Obama '08

    October 16, 2008 01:03 pm at 1:03 pm |
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