What Joe the plumber will find out.

As the owner of a small business I've got to say after watching the news this morning, people really don't seem to understand how this works.

Joe the plumber may buy a business that brings in $250k per year, but that doesn't mean Joe himself will be making 250k a year. Out of that 250k comes your operating cost, things like vehicles, equipment, taxes (both business and personal), licenses, liability insurance, employees pay, HALF of his employees Social Security tax, ALL of HIS own Social Security tax, etc, the list goes on and on.

The truth of the matter is that when politicians are out there talking about small business in general they usually mean those shops that are in the 50 to 250 employee range, the shops like Joe the Plumber and me that employee 2 to 5 people aren't even on their radars.

The truth is that if you're a business grossing around $250 grand a year, once you get done paying all the fees, deducting all of your material and overhead, pay your employees, pay your accountant, pay your taxes, and finally yourself you'll be lucky if you can clear $40k per year, and that's YOUR GROSS PAY. You'll still have to pay your personal income taxes out of that, and you'll have to pay BOTH the regular employee share of Social Security tax PLUS he'll find, he has to pay the employer share of the S.S. tax. They call that self employment tax.

So if Joe the Plumber has a good year and makes that big 250k gross for his tax return, he's going to find out that in the end, depending on his personal deductions, ol' Joe might get to keep anywhere from 20k to 30k for himself, and that's if and only if he's managed it very tightly.

So Joe, here's to you and all the other men and women out there that think they're going up into a higher tax bracket simply by being in business. When your company makes 250k, that doesn't mean you're going to keep anywhere near that.

So Joe, if you've got big dreams about big money by buying a business that makes 250k per year, don't worry who you vote for, you're going to get hosed by a lot more people than the president, and you probably would end up better off under Obama with your tax situation, especially the first year.