Joe the Dealmaker
October 20, 2008
Joe the Plumber (and wannabe Dealmaker), has received more than enough attention during the past few days, but at the risk of overexposure, we here at MergersUnleashed have to weigh in on his interpretation of the tax code. You can rest easy, Joe, under Barack Obama’s tax plan it is unlikely that your taxes will climb.
Joe, of course, is the Ohio plumber made famous for quizzing Democratic presidential candidate Barack Obama in an impromptu interview. The video of the exchange, which received play on various news outlets and political blogs, shows Joe confronting the Democratic candidate with claims that he is about to buy a company that earns over $250,000 a year. “You’re going to tax me more for fulfilling the American dream,” he asks the Senator rhetorically.
David Perkins of mid-market M&A boutique Acquisition Advisors offered his take following the last presidential debate, which saw Republican presidential candidate John McCain turn Joe into a central figure in his campaign. In an email sent out to clients and associates, Perkins noted that as long as Joe acquires the business through a purchase of assets, versus buying the common stock, he will be able to deduct the price he pays for the business as the assets depreciate. And if Joe acquires the business as an LLC or an S-Corp., he’ll only face one level of taxation. Moreover, should he be able to find leverage for the deal, though no easy task today, the debt will generate interest expense, which is again tax deductible.
In a call with MergersUnleashed, Perkins – a registered Republican – described that he is not interested in politicking for one candidate over the other. “My passion is business, not politics. I’m just looking to get at the truth,” he said.
Fortunately for Joe, the truth is that the tax plans of neither candidate will derail the American dream for the would-be acquirer.
Ken MacFadyen
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