Posted on 09/27/2011 1:36:16 PM PDT by xzins
Have you heard about 999? Sorry, it isn't a German Hausfrau admonishing her children. What is 999? It's a new tax scheme dreamed up by Republican candidate, Herman Cain. In his plan, we have a 9% corporate tax, a 9% income tax, and a 9% sales tax.
Here is the bottom line: 999 is one tax MORE than we now have. Argue all you like about the 9% rate, but know this, we are NOT now paying a national sales tax of 9%.
Please consider this. Governments love to tax. Governments love taxing so much that they will at times violate their own Constitution in their frenzy to find more tax money to fill their coffers. Fortunately, when that occurs, citizens do have some recourse in appealing to the courts the violation of their Constitution, as is the case of the individual mandate in ObamaCare.
Not so with the 999 of Herman Cain. The Constitution says that an income tax is acceptable. It speaks nary a word about a corporate tax, meaning that taxes not specifically forbidden are OK. That means a 9% sales tax can also be easily instituted by simple act of Congress.
Remember, governments loving taxes is a passion surpassing that of teenage boys loving teenage girls. They love them so much that our current income tax, once a percent or two of one's income, is now ranging into the high 30 percent. After all, they are Congress and the only thing preventing tax hikes is elections, and even they don't seem to prevent them awfully well.
So imagine that innocent looking 999 some day being 101010 or 121212 or even 303030. What's to prevent it? Absolutely nothing.
Without a Constitutional amendment setting those precise limits, or, in my opinion, an amendment that ends the socially manipulative income tax altogether and forever, those meek little 9's are very dangerous seeds planted that will grow and grow.
Therefore, there is no doubt about 999. America's response should be "Nein, nein, nein!"
By a factor of 40 or 50? Can we all say 'trade war'?
Exactly, until spending is finally brought under control, any tax plan is destined to increase.
Self-control doesn't seem to work. There must be a mechanism put in place that forces spending reduction. So far we haven't found it.
You pay 3 flat rates, 1 time each.
The 9-9-9 plan is going to be an effective individual tax rate of somewhere between 9% and 27%, depending on percentage of income spent.
The base 9% on income is right there in the plan.
Then 9% sales tax, which is also paid by the individual but only on what they spend. Spend 100% of your income, and you are now up to 18% tax rate.
And the 9% on corporations will just be included in the price of products, also applies only to what you spend, but still paid by the individual consumer. Again, spend 100% of your income and you are now up to 27% tax rate.
It really depends on how much of your income you spend. If you spend 100% of your income, your tax will be 27%. If you spend half your income, your tax will only be 18%. Rich enough to spend only 1% of your income, your tax rate is 9.18%
The poor will be paying closer to 27% and the rich will be paying closer to the 9%. Politically, that plan won’t be popular. And it will be skewered by the Dems in the general as huge cuts for the rich and huge increases for the poor.
The FairTax, which Herman at one point supported, is a much better plan than this one. Plus it includes a Constitutional Amendment banning the Income Tax.
What sources of income does the original constitution provide for funding that original government? What was the plan in that day?
When the Constitution was adopted the U.S. literally had no standing army. With the exception of wartime, when the government was funded solely by tariffs the U.S. military was always an underfunded joke. Would you have us return to that?
Nope, you pay 7% on SS and 3% on Medicare on the first X amount of income after deductions and credits.
Under the Cain plan you would pay 9% of gross income and 9% of however much you spend on the unannounced items that they plan to collect sales tax on. (Will it include sales tax on your house, your car, your utilities, your food, etc., is all unknown at this point. Therefore, I just pulled 50% of your income out of my hat as an approximation.)
Therefore, you are correct that it would be 13.5% of your gross income. A 40,000 income family with kids would pay $5400 a year versus a tax return of a couple thousand now. A 40,000 income couple without kids would probably pay about a 1000 now. 40,000 is about the American average income at this point in time, IIRC.
When Obama explains that to them...and he will...they will see Cain as the guy who wants to raise their taxes.
Don't forget those of us who have been SAVERS all our lives. See my Post 178.
We savers are REALLY going to take it in the shorts. My cumulative tax rate after I spend my saved money would be over 40%. Unless Cain tells us savers that our life savings will NOT be DOUBLE TAXED our sharpened pitchforks will come out and they will be used.
This is Cain's idea and CAIN needs to be addressing these issues. No offense, but "I got a guarantee from DouglasKC" ain't gonna cut with retirees spooked first by Perry's comments about Social Security and now Cain's comments about a National Sales Tax on people with low fixed incomes and double taxation on current savers.
Remember, we are dealing with a Congress that passes bills that are so big that nobody reads them before Congress signs off on it.
And Obama would make sure she knew that, and she along with others like her would again be in Obama's camp.
How do you adjust a tax system that has a huge built in lobby in the tax industry AND has a voting clientele of those who pay little or no taxes?
Answer: You cut spending, so you can lower everyone's taxes to the level that puts 75% or more of the population back into your camp at a very low tax rate.
You end the income tax and you fund a far smaller government with tariffs and a very low consumption tax rate of about 1 or 2 percent and with user fees for services that obviously require fees.
And if . . . could be . . . might be . . .
Yep, and the system we have now is not perverted at all, is it/
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That army was one of the best in the world by the time the 1860’s rolled around. It was more than sufficient.
How much money do you think it would take to cover the military, the judiciary, Congress, and commerce? Everything else is better kept at the state level. I’d say a trillion would still be too much.
I think we could have our current military for half the money, iow, about 350 billion bucks. Half of that would cover pay and retirement. The other half would be operations, training, and R&D...150 billion bucks.
Therefore we should add one more item to be perverted? That doesn’t make any sense.
You’re right, people would incur a tax on their savings if they spent it after a nation sales tax went into effect. I’m not familiar with the details of Cain’s proposed tax plan, however, if you were allowed to keep all of the interest/dividends earned on savings then that would offset it somewhat, also, if there were some things exempt from the national sales tax that would further offset the loss. There’s certainly a lot to chew on. For instance, if Cain should defeat Obama that doesn’t mean that 999 would become law.
I have relatives that fall into that group. I’m pretty sure that they wouldn’t go for paying an income tax and a national sales tax.
No, you’ve got it wrong.
Don’t accept a NEW tax to go with the OLD taxes unless first you have one constitutional amendment that simultaneously (1) ends the income tax, and (2) institutes a sales tax.
Believe it. I have seen too many merchants go to jail for not sending in the tax receipts.
It is a common story. Retail merchant gets in to a pinch and has a choice of who to pay the taxman or his suppliers. He decides to go late on his sales tax payments because he needs to keep stock in his store.
After this goes on a few quarters the taxman comes and audits his books and finds he owes more than he can pay. If the merchant can not come up with the money he goes to jail. He has collected the taxes from his customers but not given it to the government. He goes to jail.
I am against with holding of income taxes for the same reason. Paying taxes should be every individual’s responsibility. Not an employers or a merchants.
This has benefits besides that of keeping people out of jail. One benefit is that it makes people very aware of the price they are paying for government because they have to write the check. The second is that the politicians know that the people know what government is costing because they get the calls from the angry people who write those checks.
Unless you spend 100 percent of your income on taxable items (sales tax is an excise tax, btw, which is perfectly within the constitution), then you would not be paying 9+9+9 percent.
It is 9 percent of income, plus 9 percent of whatever portion you spend that is a taxable good - not rent, utilities, savings, insurance, etc.
I am not even sure that one can say that every good one purchases is 9 percent higher due to the corporation passing on costs. In fact, it would only be 9 percent of the profit of the item (often itself only pennies on the dollar).
IF, and this is a big IF, as well as one of the major problems with the fair tax assumption, you believe that corporations will suddenly lower prices because their costs are down due to paying less in taxes.
So, if you are keeping your living costs below 33 percent of your take home pay, but right at it, giving 10 percent, saving 10 percent, and spending the rest in a frenzy, and the corporation is passing on its tax to you, you are paying:
9% of income
+9% of 50% of your income
+9% of 50% (saying widget co. makes 50% profit) of the 50% of the income you just spent above.
= .09+(.5*.09)+(.25*.09) = 15.75%
None of this is to say that I endorse the plan yet, nor to argue against you specifically, as I see several people making this assertion, just trying to see what the compounded tax might really be under this scheme.
“Therefore, you are correct that it would be 13.5% of your gross income. A 40,000 income family with kids would pay $5400 a year versus a tax return of a couple thousand now. A 40,000 income couple without kids would probably pay about a 1000 now. 40,000 is about the American average income at this point in time, IIRC.”
Don’t know how married status, kids, standard deduction all play in to the new plan, but an online Tax estimator puts a married/joint couple with no kids, standard deductions (how are these handled in the 9-9-9 plan?) at 2300.
If single no kids - 3600.
Total FICA and Medicaid on 40K at 15.3% is 6120, plus a “couple thousand “ is more than 5400.
If one does not assume that the company would “refund” its half of FICA (why would it, really?) then it still looks like a wash.
good post, here.
How to go about this?
Thanks for the ping!
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