Under Obama’s Plan, Joe the Plumber Would Keep .39 Out of Every Dollar After $250,000
Obama and Joe Biden keep repeating that they don’t know many plumbers who make $250,000.
Joe the Plumber noted that he wasn’t talking about his current income; he was talking about the income he hopes to make if and when he runs his own business.
…Let’s say your small business starts booming and after years of hard work, you’re now making what you’ve always perceived as “real money” — let’s go beyond the $250,000 to $350,000.
Your income tax will go up from 35 percent to 39.6 percent. On the first $102,000, and then on every dollar after $250,000, the Social Security tax rate will be 12.4 percent. (It is 6.2 for those who aren’t self-employed.)
You’re keeping 48 cents out of every dollar you’re making after $250,000 — and that’s before state income taxes, anywhere from none in seven states to 5.3 percent in Massachusetts to 9.3 percent in California (10.4 if your income exceeds a million).
In Ohio, Joe the Plumber would be looking at an additional 6.24 percent on income after he made $200,000. In Holland, the village in which he lives, he has an additional 2.25 percent.
So Joe would be earning 39.5 cents on the dollar for every dollar he made after $250,000.
It’s tougher in other parts of the country. If you live in New York City, you pay a state income tax of 8.14 percent and a city income tax up to 4 percent. In those circumstances, you’re keeping a little over thirty-five cents of every dollar you make after $250,000.
…ANOTHER UPDATE: I knew this post was going to draw out the accountants and self-employed.
First, from Ohio:
Don’t forget workers comp and unemployment insurance. I just started turning a profit on my small one man business in Ohio and now I get the priveledge of paying about 1k a year to Ohio Jobs and Family services… about 2.7%. I’d love to leave Ohio.
Second:
I’m a long time reader, and had a comment on your calculations for this post. I’m a 38 year old self-employed software developer, so I have alittle background on this. You mentioned that self-empl