Fact Checking Obama on Joe the Plumber's Taxes

The almost non-partisan FactCheck.org looked at Obama's and Joe's claims about taxes and reached some reasonable but incomplete conclusions:

At their encounter, Wurzelbacher told Obama that "I'm getting ready to buy a company that makes 250 to 280 thousand dollars a year," before asking whether or not Obama would raise his taxes.

If the company is actually that profitable, and depending on how the business is organized legally, Obama's plan would indeed raise his federal income taxes, and Obama conceded as much during the exchange. As we've written before, small businesses commonly are organized in such a way that their owners file business taxes as individuals. So if Joe's plumbing business earns more than $200,000 per year (or $250,000 if Joe is married and files tax returns jointly) then his taxes would indeed be higher under Obama's plan than under McCain's.

It's worth noting that while Wurzelbacher told Fox News' Neil Cavuto that he lives "in a simple, middle class home" and portrayed himself as an ordinary working guy, Wurzelbacher's $250,000 to $280,000 is a bit higher than "ordinary." In 2007, the last year for which the Census Bureau has figures, the median income for a family in Toledo, Ohio, was $43,553.

McCain: Now, my old buddy, Joe, Joe the plumber, is out there. Now, Joe, Sen. Obama's plan, if you're a small business and . . .  you've got employees, and you've got kids, if you don't get - adopt the health care plan that Sen. Obama mandates, he's going to fine you . . . I don't think that Joe right now wants to pay a fine when he is seeing such difficult times in America's economy.

McCain raised a similar charge at the last debate. It's still false. Obama's plan, which is posted on his Web site, specifically says, "Small businesses will be exempt from this requirement."

Obama hasn't defined exactly what he means by "small" but he seems to think Joe would qualify; he repeatedly referred to Joe's "small business" during their exchange.

Obama's health plan does mandate that children have health coverage. If Joe doesn't provide insurance for his kids, he would face some unspecified penalty.

First, it is significant that McCain was probably correct in saying that Joe's taxes would be raised under Obama's "spread the wealth" scheme.

Beyond that - and this is the important thing - Obama has failed to define what constitutes a "small business."

This is an argument in government that has been going on for decades - ever since "small business set-asides" came into being back in the mid 1980's. The debate is over the fact that a certain amount - say $250,000 - in one industry that makes that business a "small" business will not be applicable for a business in another industry.

A plumbing business that takes in $250,000 a year - mostly in gross billings - is still considered a small business even though the exact same amount in sales for a retailer might put that owner in a different category.

The point is - many "small business" owners in construction will probably pay considerably more in taxes under Obama. And many of those same businesses will NOT be exempt under Obama's statist health insurance plan.

The truth can set you free...