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Cost Of Obama Plan Hard To Nail Down

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The Associated Press

Published: October 17, 2008

WASHINGTON - Small business owners, the kind Joe the plumber says he hopes to become, will need an expert from another profession - a good accountant or perhaps someone with a crystal ball - to know whether Barack Obama's tax plans will help them or send money swirling down with the Drano.

Is John McCain right? Would someone owning a company that makes more than $250,000 a year pay higher income taxes under Obama, as McCain claimed in making Ohio plumber Joe Wurzelbacher the man of the moment in Wednesday night's presidential debate?

Much depends on how such a company is organized for tax purposes, and what its profits are.

What the candidates say:

John McCain, to Obama: "What you want to do to Joe the plumber and millions more like him is have their taxes increased and not be able to realize the American dream of owning their own business."

Obama: "If you make less than a quarter million dollars a year, then you will not see your income tax go up, your capital gains tax go up, your payroll tax. Not one dime."

Well, Obama would increase the tax rate to 39 percent from 36 percent on joint income over $250,000 and individual income over $200,000. Most families would get a tax cut under his plans.

Whether Wurzelbacher would pay more depends on unknown facts such as how much he would earn as an owner and whether he would file the business taxes as an individual.

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