Posted on 10/18/2011 9:30:08 AM PDT by marty60
Herman Cain has been gaining much traction with his 9-9-9 Plan, a bold proposal to replace our dysfunctional tax code with what could be a simpler, less invasive, and more economically stimulative alternative. While I don't agree with the full spectrum of Mr. Cain's policy choices, I applaud his courage on the tax front. Judging by his rising poll numbers, this appreciation is widely shared. However, the plan has deep flaws, the most glaring of which is its creation of a hidden payroll tax which represents a fourth "nine." This serious pitfall has been unmentioned by Mr. Cain and overlooked by those who have analyzed his plan.
(Excerpt) Read more at safehaven.com ...
As usual, Peter Schiff is right. I spotted this when I first read the plan. IMHO, this is something that would need to be ironed out when this skeleton of a plan becomes actual legislation.
Oh,and Marty, don’t think people aren’t ware that you’re one of the more obnoxious of the Perry supporters. That’s just an FYI observation.
This confuses me. What about a company that spends almost as much on wages as it earns? Is the author saying that it is taxed on gross income and cannot deduct the major expense (wages) according to Cain's plan.
Maybe I'm naive, but I just assumed that taxes on businesses would naturally be after expenses. And wages are a major expense.
I'm going to mull Schiff's analysis more before posting further. But something doesn't seem right about it.
As for the above, Herman Cain IS committed to spending cuts. (Just a few days ago he floated Paul Ryan as a VP possibility.) The 999 plan is not the entirety of what a President Cain says he would do if elected. I think everyone agrees that spending cuts are critical.
So, if Schiff's argument is blah-blah-blah, but the problem can be fixed by combining 999 with spending cuts, well yeah. The Tea Party knows and is committed to major cuts in spending. The fact that that is not brought up every time 999 is debates doesn't mean the commitment is not there.
Sorry that is not a 4th 9.
Nice try Mr Schiff but eliminating the capital gains tax, eliminating business's share of the payroll taxes and reducing their over all tax rate from 35 to 9% plus eliminating all the other hidden taxes business pays in the current tax more will more then make up for losing the wage and salary deduction in the current code
Love the way everyone in the Junk Media has their own personal gimme in the current code they just cannot bear to part with. Seems they would rather keep all the existent corrupt failed tax policies in place then ever give up any of their current loopholes.
Economists like Peter Schiff who follow the Austrian philosophy fully understand the importance of turning from a “spending” economy to a “savings” economy, and as he says, since more low-income people spend all their earnings, the saving (like the bulk of the tax paying) will be done by the middle and upper income workers. Schiff would have to turn in his union card if he did not recognize the massive impact that 999 would have on economic growth, and more jobs combined with the exact kind of reductions in the size of government he describes would help the poor as well as everyone else.
I like Schiff, but he knows that on a macroeconomic level, 999 has a lot more going in its favor than against it, and the details would have to be worked-out in a way that implements the benefits while transitioning more people from welfare to work, and productivity.
"Even with its flaws, the 9-9-9-9 plan would create an economic windfall by lowering the top corporate rate to 9% from 50% (35% at the corporate level and 15% on dividends taxed at the individual level), and simplifying the tax code to reduce unnecessary compliance costs and the economically inefficient behavior that is created by perverse tax incentives. These changes alone will make America far more globally competitive.
Also by taxing individuals based more on what they spend rather than on what they earn, the plan will encourage more savings (which is a key ingredient for economic growth). As a result, the economy will grow faster, generate greater output of goods and services, and create more jobs."
Nice compliment(s) from a RuPaul supporter.
What about the current city and state sales taxes? Would they be added to one of the 9s? I like the idea of 999 but have serious reservations.
Cain's a good start!
The growth of our out of control Federal Government tracks directly to the implementation of the income tax.
As long as you give politicians a potentially unlimited income stream, as the income tax does, they will find ways to spend it.
We can cut and cut and cut but the spending always comes back. Reagan cut the most of any modern President and the spending came back plus more.
Until you address the revenue side, Federal Spending is not going to be controlled no matter how much any President cuts.
You have to limit the Congress’s ability to spend and borrow money (Cut, Cap, and Tax) but then you also need to limit it’s revenue stream. Cain’s 9-9-9 does that. Other Candidates should come up with their own ideas on how to accomplices the same goal. The current tax does is both corrupt and inefficient.
The genius of Cain’s 9-9-9 is, for the 1st time, there is a leading Presidential Candidate putting out a plan to limit Fed revenue. The key components is the sale tax. By spreading a lower over all tax burden to all Americans he creates an insurmountable problem for any future tax raises.
How do you convince people to give you more taxes when they personally know they will pay for the tax hike?
See the trick now is Congress can always disguise any tax hike by hiding it inside the overly complex tax code. By tweaking around the edges with the tax code they can gradually and systematically raise taxes with virtually no one noticing.
9-9-9 eliminates that ability to “tinker around the edges” of a mind numbingly complex tax code
‘I applaud his courage on the tax front. ‘
So the logic is, that scrapping the taxes will increase people’s paycheck and they will have to pay the 9% of the portion of the increase .... and this is the forth 9?
Someone can only see this as a fourth 9 if you think this money being taxed now is going into a lock box like a savings account.
“the plan eliminates the deductibility of wages and salaries from corporate income.” ... that isn’t true ... what you pay workers is a cost that you gets subtracted from your gross revenue to determine your profit. You pay taxes on your profit not your gross. That doesn’t change.
What am I missing? is this guy just a bad writer?
While Schiff, as he is wont to do, sensationalizes this somewhat by calling it a "brand new tax" etc., isn't the bottom line here simply that (if Schiff is accurate on how 999 treats corporate income) corporate income would be increased by the amount that was formerly shielded by various deductions?
The same will occur to individual income if various deductions go away. (Cain's website says individual taxable income = gross income less charitable deductions.)
Is this like some big surprise when the tax code is eliminated?
So Schiff is saying corporations would now have to count as income wages they previously sheltered through deductions (what Libs call loopholes). Okay. But a corporation's compliance costs should go to just about zero eventually. And a reduction in the corporate income tax rate from 50% to 9%, plus elimination of the capital gains tax and the payroll tax, should allow corporations to absorb quite a bit of "new" (newly unshielded) income without it being a net tax increase.
Cain’s plan is nothing more than smoke and mirrors with a catchy phrase. Anyone with any mathematical ability can show it means a huge tax increase on the poor and middle class. As Schiff says when that is revealed it is a dead letter.
Ping for later
The Federal government has nothing to do with city and state taxes of any kind.
—What the country needs is some courage on unemployment.—
I agree. The problem is that if they do the right thing (stop the crazy extensions) those falling off without finding jobs will become so numerous that they will become their own “Occupy Mainstreet” crowd and they will not be as harmless as the kids have been so far.
THe problem with our situation is that doing the right thing will be extremely painful for the country, much as amputating an infectious limb is. Everyone would rather keep the leg and eventually see the patient die, which is what is happening and will happen.
you are nuts
Cains plan is perfect.
The way Peter is explaining this has completely lost me. I need a white board.
If your business is labor intensive, so is your competitor’s. Your pricing structure only competes with your competition. The 9-9-9 plan levels the playing field.
How you ask? Here is an example:
Company AAA has sales of $1 Million and profit of $0.4 Million.
Company BBB has sales of $1 Million but loses $0.2 Million.
Both make the same type of product. In current tax structure, AAA gets a 35% tax bill. BBB pays no tax. In fact they get a tax loss carry for next year, giving them unfair advantage over competition because they can lower the selling price and still make a profit.
In the meanwhile the workers laid off by BBB are paid unemployment with taxes generated by AAA.
What all this boils down to is that AAA has a better business model than BBB. The tax system should reward outfits who are more productive because it is they who will expand and stay competitive and create jobs.
9-9-9 would have charged both AAA & BBB the same tax because their sales volume was the same.
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