Replies

I have concerns about his 999 plan. Where is he going to cut taxes enough to compensate for a 9% federal sales tax...on top of your current state or local sales tax.

My current tax rate, with deductions, is about 11%. So while I would gain a little on the income tax I would immeditely pay much more on the 9% federal tax.

Am I missing something?

Reducing corporate taxes could allow prices to come down to compensate for the 9% sales tax. This is the claim of the Fair Tax people anyway. More likely, since you have a choice in whether to buy something or not, unlike your income taxes, if the price is too high the seller will have to bring it down and can as long as he is making a profit, remember less taxes to the fed.

RE: My current tax rate, with deductions, is about 11%. So while I would gain a little on the income tax I would immeditely pay much more on the 9% federal tax.

This will happen to me too. However, if it will SIMPLIFY the tax code ( literally throw it away ) and keep the IRS off our backs, I say it's a price worth paying.

And if you are an investor, you have benefits.

Here's his plan in a little bit more detail :

PHASE 1: FIX AND FLATTEN THE TAX CODE

•The Phase 1 Enhanced Plan incorporates the features of Phase One and gets us a step closer to Phase two.

•The Phase 1 Enhanced Plan unites Flat Tax supporters with Fair tax supporters.

•Achieves the broadest possible tax base along with the lowest possible rate of 9%.

•It ends the Payroll Tax completely – a permanent holiday!

•Zero capital gains tax

•Ends the Death Tax.

•Eliminates double taxation of dividends

•Business Flat Tax – 9%

◦Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders.

◦Empowerment Zones will offer additional deductions for payroll employed in the zone.

•Individual Flat Tax – 9%.

◦Gross income less charitable deductions.

◦Empowerment Zones will offer additional deductions for those living and/or working in the zone.

•National Sales Tax – 9%.

◦This gets the Fair Tax off the sidelines and into the game.

PHASE 2 – THE FAIR TAX

•Amidst a backdrop of the economic boom created by the Phase 1 Enhanced Plan, I will begin the process of educating the American people on the benefits of continuing the next step to the Fair Tax.

•The Fair Tax would ultimately replace individual and corporate income taxes.

•It would make it possible to end the IRS as we know it.

•The Fair Tax makes our exported goods and services the most competitively internationally than any other tax system.

Summary

•Unites all tax payers so we all pay income taxes and no one pays payroll taxes

•Provides the least incentive to evade taxes and the fewest opportunities to do so

•Lifts a $430 billion dead-weight burden on the economy due to compliance, enforcement, collection, etc.

•Is fair, neutral, transparent, and efficient

•Ends nearly all deductions and special interest favors

•Ends all payroll taxes

•Ends the Death Tax

•Features zero tax on capital gains and repatriated profits

•Lowest marginal rates on production

•Allows immediate expensing of business investments

•Eliminates double taxation of dividends

•Increases capital formation. Capital per worker drives productivity and wage growth

•Capital formation will aid capital availability for small businesses

•Features a platform to launch properly structured Empowerment Zones to revitalize our inner cities

•We all know the Fed has tripled the money supply since 2008. They have been printing money out of thin air to finance the Obama spending machine. While true Fed reform that restores sound money may have to wait for my election, the best thing we can do now is to pursue policies that increase the DEMAND for dollars to help mitigate the risks associated with the increase in the supply.

•Pro-growth economic policies equal a strong dollar policy

With the 999 plan Cain is ignoring and/or ignorant of legislative realities in a way that he wouldn’t get tripped up by business realities were he to take over as CEO of a company.

Gingrich, well grounded in legislative realities, has pointed out the obvious: adding a national sales tax apparatus to all the fed’s current tax collection capabilities would merely present an irresistible temptation for Congress to hike up taxes in even more ways than before.

Cain’s a nice man, but he shouldn’t be president.

My current tax rate, with deductions, is about 11%.

That's your effective tax rate, Josa. Earn another thousand dollars and (presuming that you're in the 25% marginal tax bracket) you'll see only $750 of that grand. You effective rate will go up only slightly, but you're only ever going to see 3/4th's of your increased pay.

My old employer tried to float that cr@p on us when we had to start paying taxes on a previously untaxed benefit. It's the same mentality that talks about their take-home pay without addressing how much of it they're losing in taxes, etc.

It pi$$ed me off then when a supposed finance and tax professional tried to lie to me about it then, and it disturbs me today when I realize that so many people don't have much of a clue about the tax system in this country.

I have concerns about his 999 plan. Where is he going to cut taxes enough to compensate for a 9% federal sales tax...on top of your current state or local sales tax. My current tax rate, with deductions, is about 11%. So while I would gain a little on the income tax I would immediately pay much more on the 9% federal tax. Am I missing something?

Considerably more than 18% of the amount you spend to purchase goods or services will actually be taxes going to the federal government. Imagine a basic transaction where you purchase something directly from the manufacturer.
Your income is taxed at 9%.
You pay another 9% national sales tax on the price you pay for goods.
The price you pay for the goods is comprised of the actual manufacturing cost, plus profit, plus 9% in corporate income tax.
Therefore a product the manufacturer would sell for $100 must have $9 in corporate income tax added to it; so it will be priced at $109.
When you buy it for $109 another $9.81 will be added as a 9% national sales tax so it will cost you $118.81.
You have already paid a 9% income tax of $11.75 on the $118.81 you will spend to purchase the product.
So, in this scenario, the total taxes to the government are:

$9.00 corporate income tax of 9% paid by the manufacturer

$9.81 national sales tax of 9%

$11.75 income tax of 9%

$30.56 = TOTAL TAXES TO THE GOVERNMENT

This is a simplified transaction where you buy directly from the producer or manufacturer. Actually, in a more complex transaction the government would probably realize much more in taxes than the $30.56 because there would be other parties involved.
Usually the maufacturer sells to a distributor and the distributor sells to a retail outlet and the retailer sells the product to you.
In that case the manufacturer pays a 9% business tax, the distributor pays a 9% business tax and the retailer probably pays a 9% business tax also.

Yes. The plan also eliminates payroll taxes, putting that 7.65% back into your pocket. You’re ahead of the game.