In this Alice-in-Wonderland world of election claims, counterclaims, lies, and bigger lies, one of the more bizarre stories is that of Joe the Plumber, a tradesman mentioned no fewer than a dozen times in the last and final Presidential debate.
Louise at Colorado Health Insurance Insidertook a look at Joe’s financial picture, and how Joe’s finances would be affected by the Obama and McCain tax and health care plans.
But first, a little fact checking. Joe’s not a licensed or registered plumber. He’s never been formally trained as a plumber. He can’t work as a plumber except in a few townships in Ohio. Perhaps it would be more accurate to call him ‘Joe the Plumber’s helper’.
Second, court records indicate Joe earned about $40,000 in 2006 (previous citation).
Here’s how the McCain tax and health reform plans would affect Joe (from Louise’s piece). Note that Louise assumes Joe’s company is earning a profit of $280,000 because that’s what Joe said the company ‘makes’. (which, according to D&B, it isn’t).
“if the business is paying premiums for two families, at roughly $12,680 each, that’s $25,360/year that the business is spending on health insurance premiums and deducting as a business expense. So that money is currently not included in the $280,000 profit the business makes. Losing that tax deduction [per the McCain plan which eliminates the employer deduction for health insurance premiums] would mean that the business would be paying 36% tax on the $25,360 that they currently pay for health insurance premiums. That’s $9,129/year in additional taxes.”
versus the Obama plan, which
“would raise taxes on small business profits (not revenue)[emphasis added] that are over $250,000 (a threshold that the vast majority of small businesses don’t even come close to reaching). In this case, that would be $30,000/year in profits being taxed at the higher rate. The tax rate on that $30,000 would go from 36% to 39%. The difference would be an additional $900/year in taxes for the business. The business would still get a tax deduction for the health insurance premiums they pay, so it would continue to make good business sense to offer group health insurance for the employees.
So Obama would increase taxes on the plumbing business by $900/year (if the business is making an annual profit of $280,000).”
But Joe’s company doesn’t make anywhere close to that – in fact annual revenues (not profits) are about $100,000.
The net?
“McCain would let the business keep that $900/year, but he would take away more than $9,000 in tax savings that the business gets by deducting health insurance premiums.”
There’s a bit more to this. If Joe is healthy, he may well qualify for coverage under the McCain plan – he’s 34, single, and works out, so insurance companies will want to take his application. But if he has an pre-existing conditions, chances are very slim he’ll get coverage at a rate he can afford (remember he makes $40,000 or so a year). He would be able to get coverage under the Obama plan, regardless of pre-existing conditions – coverage that would likely be more expensive, but would protect Joe from cancellation and ensure he has comprehensive benefits.
We don’t know if Joe has insurance right now; if not he’s covered if he gets injured on the job through workers compensation. If it’s not occupationally-related and he doesn’t have insurance, he’s going to get charity care (there’s no way Joe can afford a day in the hospital on his income).
Insight, analysis & opinion from Joe Paduda