Posted on 10/08/2011 8:16:12 PM PDT by federal__reserve
I am seeing many posts regarding Herman Cain's 9-9-9 tax plan, many with omissions and errors.
So, if your gross paycheck is $50,000 then the total payroll tax is $7650.00. Half you pay and employer pays other half. All that will be abolished by 9-9-9. This is a huge saving for any one who has a job. Your employer can now give you a 7.65% raise without costing them a penny.
>> You will pay 9% Federal Sales Tax (FST) when you buy anything NEW. Note that you do not have all of $50,000 to spend on new stuff. Your take home pay is reduced by federal income tax withholding and any contributions to 401-k or other retirement plans, state tax withholding, city tax withholding, union contributions etc etc.
>> From your take home pay most people have to pay rent or mortgage payments + property tax, car payments, HOA fees, Utility bills, insurance premiums, credit card interest, etc etc. There is no FST on these items.
>> After paying all of above items, what is left is the most you can spend on buying new stuff. We all know how much smaller that amount is compared to our $50,000 gross paycheck. It is not too difficult to add up all the new stuff you buy in a month and multiply that by 0.09 to compute your Federal Sales Tax.
>> The 9-9-9 plan abolishes income tax on dividends and capital gains, and death tax.
>> 9-9-9 will benefit overwhelming percentage of working people but a small fraction may not benefit. You have to compute your own situation. No article can tell you how it will affect your individual situation. So, before jumping to conclusions please consider all of this.
I see it as a starting point.
The sticking point for me is that it leaves the income tax in place. I’m OK with an income tax OR a sales tax, but not both. That’s an open invitation for govt to simply suck more revenue out of us.
I agree, it is just a starting point. It gets rid of our overly complex tax code with loopholes galore. Lobbyists will hate it because it takes away their influence on politicians.
People worry about sales taxes being raised but those are so visible that politicians don’t want to risk it.
It depends on how much income tax you will pay with top rate of 9% versus your current effective income tax rate.
Most middle class people pay more than 9% right now. And the sales tax will be way less than 15.3% payroll tax on your GROSS paycheck.
Excellent point....my wife for example, knows exactly what sales tax rate is on anything she buys, but can not tell me what her payroll tax is.
Herman Cain spoke of items excluded on the sales tax level, do you know what these are? I thought he said the purchase of a used car or maybe it was a new car, one you pay 9% the other you don’t. It sounds fair to me, we are taxed to hilt in OR, would rather pay 9% sales even though we pay 0 right now, and pay 9% income, property taxes kill us too. The man, so far, has my attention.
IT is genius!! I think , he is actually a rocket scientist— did you know that? Perry is history. Romney has a chance unless we stop “winner take all” primaries. Obama is sooo bad we can beat him with anyone.
It also depends on the amount of deductions you take which will lower your percentage.
Yep....and what’s to stop them from raising thnote sales tax over time. Plus, you will still be paying your current state sales tax in addition to the federal sales tax. Nope, not a fan of a federal sales tax.
Yes I knew that Cain’s first job was as a rocket scientist with US Navy. He has a degree in mathematics.
Yes, I agree. One or the other. Leaving an income tax in place is an open invitation to the future politicians to raise both.
Michigan’s sales tax went up 2 cents to 6 cents back in 96 or so and hasn’t budged since. Screwing with that is political suicide.
RE: That’s an open invitation for govt to simply suck more revenue out of us.
For those who are afraid that the 9 will become a 10 and then 11 and then higher, Cain’s plan INCLUDES a requirement that 2/3 of Congress vote for any increase in percentage.
Which makes it VERY DIFFICULT to increase in practice. And if you’re worried that it might happen, hey, why aren’t you worried about any increases NOW?
For those who are afraid that the 9 will become a 10 and then 11 and then higher, Cain’s plan INCLUDES a requirement that 2/3 of Congress vote for any increase in percentage.
Which makes it VERY DIFFICULT to increase in practice. And if you’re worried that it might happen, hey, why aren’t you worried about any increases NOW?
I am in agreement with you there. Not crazy about the new National sales tax on top of my local and state taxes. No new taxes!
It’s all just a mathematical exercise that’s interesting and but zero chance of implementation regardless of the makeup of congress.
That is my understanding, and I heard it directly from Herman Cain during an interview. He said there will be no sales tax on anything you buy used because the tax was already paid on it.
I will post more details after I read his book and read more articles.
“The man, so far, has my attention”
Mine as well. The 999 plan needs refinement and guarantees, but it’s a start. Personally, I like a 15% flat tax excluding the first $50K of income.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.