Posted on 10/11/2011 6:56:32 AM PDT by SeekAndFind
>>You might want to skip the other posts to focus on Posts 75 and 118 on this thread, because they deal directly with the Tax Wedge issue you brought up.<<
Actually, they don’t. Those posts address the problem of comparing the sales tax to a profits tax, a problem I also addressed just above this post because I’d failed to read all the previous posts.
The tax wedge is huge, and it’s spread across the price of any particular product in a multitude of ways. The reason it’s a wedge, is because it, like a doorstop, stops movement. An economy faced with a huge tax wedge stalls out, with one person not hiring another to do something they’re trained to do, preferring to do it oneself, simply because the government takes such a huge chunk (wedge) of the transaction if it’s reported.
If I hire my plumber neighbor and pay him $500, and he reports that to the government at his marginal tax rate (because it was his last income earned, as a personal favor to me, working after hours, say) The government at all levels will take over 40% of that $500 and perhaps more, maybe much more in places like NYC, when you consider that he must pay a doubled SS/Medicare tax of 15.3% and a personal tax rate of, say 25% or higher, plus a state tax rate of, say, 6% or higher. His remaining share of our $500 transaction could be as little as $200, which is why there are so many of us do-it-yourselfers. He has to charge that much to make $200-$250 for the work.
Under 9/9/9, 18% plus the state taxes would cover the tax bill, and he’d keep closer to $350-$400 for his work. But more likely, he’d do the work for only $300, the government would get its 25% or so, or $75, and he’d get his original $225 or so.
However, with plumbers rates falling dramatically, everyone would decide to have their work professionally done, and the demand for plumbers would skyrocket (obviously, I’m exaggerating here, but not as much as one might think) and all those unemployed people would soon find very good paying jobs, after they got some real training, not government jobs training. Taxes collected would also begin to rise, incidentally, enabling not the increasing, but rather the decreasing of the 9/9/9 rate. (I know, wildly optimistic, but not impossible, since the rates would be extremely transparent.)
And our homes would not suffer from lousy do-it-yourself jobs, our wives would be happy, and we’d all be getting more .... okay, that IS an exaggeration...
Okay, but in a given paycheck, conservatively speaking, I pay 20% effective income tax (after deductions) and now I’m going to pay 9%. If I earn $10,000/month I’m going to pay $900.00 in tax instead of $2000.00, giving me $1,100 back every single month. This doesn’t even take into account the additional $765.00 I save by not paying FICA and Medicaid.
Save up for a month and I pay for the additional tax on the car. Save up for a year and I buy the house.
I say “yes”. No, I say “heck, yes!!”
Don't forget the additional 9% sales tax on everything you buy. So if you spend $9,000 per month on food and clothing and gas and car and doctor's visits and what have you then that's an additional $900. So that's $1800 in taxes, a bit of a break but not so big as to swing that house you're talking about.
I don’t spend 90% of my income on consumer goods. LOL!
And 9% of $9,000.00 is $810.
No wonder you don’t like 9-9-9. Your math skills are rusty.
OK, so what is 9% of 9000?
A lot of people do. A lot of average families making an average income are going to see their taxes go way up. They may not be as thrilled as you are.
Doesn’t anyone EVER want to acknowledge that perhaps under 999, prices WILL go down due to competitition, and MORE people will come off the unemployment roles?
More people w/ jobs over time means MORE people have developed a work ethic, have worked and gained experience in the job market. Perhaps a dual income earning couple could save enough to buy a home, live a better life, have pride in what they’ve worked for.
I’d rather pay 9% and have a job than nothing and have no job and pay nothing into the system.
Having all these people on permanent unemployment begging for handouts ..what’s that doing to the psyche of this country? It’s a hideous thought.
I’m also pretty preturbed that 50% pay nothing — so, they’re enjoying roads, handouts, and the protection of our military for FREE — every day. That’s not FAIR to working people like myself, who hoof it and get up early everyday to pay almost 40% of MY income in taxes. I can’t afford the big cars, the bling, the flat screen TV’s that some of these so-called “poor” seem to be able to obtain.
Can someone explain to me how 9-9-9 does NOT become 10-10-10 in the next congress, or then 18-18-18 under the next D admin?
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I think Cain’s new Tax plan would help prevent taxes from going up all the time.
Under the current tax code we just have an income tax, one reason it is this way is because the Govt can get there money and people feel the impact of it less. If they never have the money in their hands they don’t miss it as much. They don’t feel the impact of the tax rate as much.
With Cain’s new Tax revenue stream of a sales tax people will feel more of the impact of a tax rate hike. More people would then be against higher taxes.
It would be just like this threads question, people are going to have to pay more for food every time the Dem’s want to raise taxes.
The bigger issue is preventing the plan from going to a rate of 15-15-8, of 24-25-9. My bet would be you would always see the sales tax the lowest because people have the money in their hand and they will fight against that tax rate increasing
Perhaps they will come down. Perhaps not. I can't think of anything that will force it to happen, short of government legislation, and a whole lot of reasons why it wouldn't.
More people w/ jobs over time means MORE people have developed a work ethic, have worked and gained experience in the job market. Perhaps a dual income earning couple could save enough to buy a home, live a better life, have pride in what they’ve worked for.
You seem to be assuming that none of the people who currently pay no income tax also work. That's a ridiculous assumption to make.
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