Actually, it is more accurate to say you are taxed three times. Because the first 9% is a tax on your income. The third 9% is a sales tax, which is a tax on the income that you spend that was already taxed at 9%. The second 9% is a corporate tax, which will be added to the price of the things that I buy when I get to pay the sales tax with the money I was already taxed on — three taxes. 27%.
Still less than what I pay now, probably. And I can control it a bit by not buying things, but that means we have an incentive to stop spending, which isn’t exactly good for economic growth.
Frankly, I don’t think the income tax is a bad tax, we just need to protect the minority from the tyranny of the majority by spreading out the pain of the income tax on more people.
Right now, a majority votes for politicians who then overtax the minority to give their money to the majority. That is a recipe for collapse.
Don't forget that the savings you have accumulated up to now will end up being taxed out the wazoo.
Although a high earner, I have always been a frugal guy and a high saver. I had the top income tax rate rate of 35% last year. So, let's do the arithmetic for $100 earned and saved in December 2010 and then spent in 2014 under the 999 Plan.
($100 earned in 2010) - (35% Income rate) = ($65 left over to put in the bank in 2010)
($65 of saved money) - (9% Federal Sales Tax in 2014) = ($59.15 of left over purchasing power)
TOTAL CUMULATIVE TAX RATE ON THAT MONEY SAVED AND SPENT: 40.85%
Those of us born in the 1950's who were taught the conservative values of hard work, frugality and savings will take it in the shorts as our life savings will be double taxed at an obscene cumulative rate.
Those who were taught to spend like drunken sailors without ever saving a dime don't have to worry about the double taxation on their current savings because they HAVE no savings.
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.