Would Joe Get a Tax Increase At All? (Or a Tax Cut)

Dean Baker notes [1] that the "giant" tax increase Joe the Plumber fears would prevent him from buying a $280,000 plumbing business would amount to, at most, $900:

Mr. Wurzelbacher says that he is planning to buy a plumbing business that has profits of between $250,000 and $280,000 a year.

While this income would put Mr. Wurzelbacher above the threshold where he could expect to pay higher taxes under Senator Obama's tax plan, the increase in his tax bill would be relatively modest. Under Senator Obama's plan, the tax on income above $250,000 would increase by 3 percentage points from 33 percent to 36 percent. This means that Mr. Wurzelbacher could expect to see his tax bill rise by between $0-$900, assuming that this plumbing business would be his entire taxable income.

But as my wife [2] mentioned to me this morning, Joe hasn't specified that this business has a net profit of more than $250,000. He told Obama [3] this business "makes" between $250,000 and $280,000, but it's not clear if that's before or after expenses.

If it's before taking expenses into account, the net profit would surely be below $250,000 -- like the vast majority of small businesses -- and Obama's proposed tax plan would have no impact on him at all likely cut his taxes by about 2% [4]. (Obama did not ask Joe to clarify this and took him at face value that the business would put Joe in the upper tax bracket.)

Either way, as Dean says, it is implausible that the tax plan would have any affect on the decision whether or not to purchase this business.

But if nothing else, both in the debate [5] and in his earlier exchange with Joe [6], Obama is plainly stating what's in his tax plan, and voters can decide if it's fair or not.

That's not ramming anything down anyone's throat. That's democracy. It's our government. We fund it. We direct it. We say what tax plan makes the most sense. And there's a clear choice before us.

UPDATE: ABC reports [7], in fact, this business does NOT have a net profit of $250,000.

ABC News' Chris Bury is outside Toledo, near the home of Samuel Joseph Wurzelbacher, aka "Joe the Plumber," and reports that Wurzelbacher -- such a key part of Sen. John McCain's critique of Sen. Barack Obama's economic proposals -- acknowledged that he wants to purchase the plumbing business for $250-280,000, not that he would net that much in profits.

He would make much less, he said.

Which would seem to indicate that he would be eligible for an Obama tax cut...