You seem to scoff at the idea that eliminating the corporate income tax and replacing it with the lower flat tax rates will reduce the cost of new goods purchased by businesses and consumers, but that will clearly be the case for producers of goods at least where labor costs are not the overwhelming factor in costs and expenses.
With respect to social security and medicare, these are NOW being financed out of general revenue. The trust fund is nothing more than an accounting entry.
And even though the employer's share of these payroll taxes are deductible under the current system, nevertheless it is still the case that eliminating corporate income taxes of up to 35% down to 9% will lower the taxes on most businesses.
Yes, if you are hyper-labor intensive you may not be better off. But shifting incentives in our economy toward the production of more higher-value added capital equipment and towards manufactured goods mean a higher standard of living ultimately for our workforce.
Your main gripe to my mind seems to be not everyone is in a better situation under 9-9-9. Well, there is no such thing as a free lunch.
But on a macro level, if we assume the tax is revenue-neutral, (1) by moving part of it to a sales tax places part of the burden onto foreign goods, making domestic production of goods more competitive, and (2) eliminating taxes on investment and taxing consumption changes the incentives toward savings, the lack of which has been one of our greatest problems as a nation over the last 25 years (until the recent recession spike).
Yes, there is no free lunch - some will pay more instead of less. But for our nation as a whole, 9-9-9 benefits our economy better than the current system.
[Here again, you are being misleading - the 9% the employee pays replaces the individual tax under the income tax code, so you need to add that to the 15.3% when you compare it to the 9% employee flat tax added to the 9% employer wage tax]
You lost me there. Employer’s don’t pay 15.3%, they pay 7.65% with limits on the SSA portion.
[You seem to scoff at the idea that eliminating the corporate income tax and replacing it with the lower flat tax rates will reduce the cost of new goods purchased by businesses and consumers, but that will clearly be the case for producers of goods at least where labor costs are not the overwhelming factor in costs and expenses.]
So I ask you then, do we live in a manufacturing, retail or service sector economy? It would be nice if we had something to manufacture, wouldn’t it?
[With respect to social security and medicare, these are NOW being financed out of general revenue. The trust fund is nothing more than an accounting entry.]
That’s incorrect. The 15.3% collected from Social Security and Medicare taxes each year is paid into the “Trust Fund” and goes back out of the Trust Fund in the same year. It’s only when there is a shortfall that the general fund get tapped.
[Yes, if you are hyper-labor intensive you may not be better off. But shifting incentives in our economy toward the production of more higher-value added capital equipment and towards manufactured goods mean a higher standard of living ultimately for our workforce.]
It also means fewer jobs. So when Cain say’s this plan will create Jobs, he is incorrect. You can’t have it both ways. I mean you can’t say that wages are not tax deductible and expect employers to pay more wages. Unfortunately, a service based economy means that labor is the number one cost.
[Your main gripe to my mind seems to be not everyone is in a better situation under 9-9-9. Well, there is no such thing as a free lunch.]
Well, according to The Tax Policy Center, around 84% of Americans will be worse off. So who’s getting a free lunch? If the plan somehow paid off the National Debt, or balanced the federal budget it might have merit, but since it tackles neither, I fail to see the point.
[(1) by moving part of it to a sales tax places part of the burden onto foreign goods, making domestic production of goods more competitive]
So under that theory, all the goods made in China, India, and Mexico will start being produced here instead. But if labor and overhead are still cheaper there, I don’t see how this will help. We could cut taxes to zero and still wouldn’t be able to compete. All we will accomplish with this plan is bankruptcy. (Hmmm, it sounds like the 999-Plan to Bankruptcy).
[But for our nation as a whole, 9-9-9 benefits our economy better than the current system.]
So where’s the proof. Show me where this 999-Plan has been implemented anywhere in the world, and let’s see how well it has worked. But if it has never been tried, then it’s just more Hope & Change. What we need right now is what we know works, not to turn our economy into an ongoing experiment. But that’s my opinion.