Posted on 10/11/2011 6:56:32 AM PDT by SeekAndFind
Herman Cain's 9-9-9 plan, which the former Godfathers Pizza CEO and current Republican presidential front runner claims will slash taxes and consequently boost the economy, includes some tax increases that may not go over well with many struggling Americans: specifically, sales taxes on both food and clothing.
During an interview with CNN's Candy Crowley on Sunday, Cain said food and clothing would not be exempt from the 9 percent national sales tax he would attempt to enact if elected in 2012. Crowley, who seemed surprised by a potential tax on those basic necessities, pushed Cain to expand on his reasoning.
"So a poor person is paying the same amount of taxes on groceries as I am? Does that sound fair to you, just in a vacuum?" she asked.
Cain responded that "Yes, it does sound fair," claiming the tax would even out since under his policy, those same low-income individuals would not pay taxes "if they need to buy a car or a home or some hard goods that are used."
Cain argues that because the 9-9-9 plan -- which would implement a 9 percent flat-tax on personal income and corporate income, in addition to the national sales tax -- would lower income taxes for many Americans, they will have more money to spend and will be able to afford higher taxes on food and clothing.
However, Michael Linden, the Center for American Progress' Director of Tax and Budget Policy, told Think Progress that because the bottom quintile of earners currently only pay about 2 percent of their income in federal taxes, under Cain's plan they would be paying considerably more. Specifically, he said with the 9 percent tax on every dollar they make, as well as every dollar spent, the poorest Americans would pay a whopping 18 percent of their income in taxes.
Comparatively, Linden said middle-class earners would see their taxes rise from 14 percent to about 18 percent, while the richest one percent of Americans would see their tax rate fall from about 28 percent to 11 percent under the 9-9-9 plan.
"It would be the biggest tax shift from the wealthy to the middle-class in the history of taxation, ever, anywhere, and it would bankrupt the country," Michael Ettlinger, the vice president for economic policy at the Center for American Progress, told The Wall Street Journal.
While Cain has touted his plan as the solution to the nation's economic struggles, Linden's analysis found that, based on 2007 tax data, it would actually result in the largest budget deficits since World War II. If applied that year, the 9-9-9 plan would have yielded just under $1.3 trillion in total federal tax revenue -- 9.2 percent of the GDP -- compared to 18.5 percent of GDP in tax revenue that was actually collected that year.
Cain's plan to tax food is so surprising that even the Tea Party group FreedomWorks assumed certain vital goods, such as food and medicine, would be exempt from the 9 percent national sales tax.
"If you're one of the minority of people -- the top 10% of the population -- who pay 70% of the income tax revenues, you might see the change as a good deal.But if you're lower down the income scale, and especially if you're one of the 50% of Americans who don't pay any income taxes, then you might not see it as such a good trade," FreedomWorks' Web site states in an Oct 6. blog post titled "Herman Cain's "999 Plan": The Good, the Bad and the Ugly.
Thirty-one states as well as Washington, D.C. exempt most groceries from the state sales tax, according to the Center on Budget and Policy Priorities. In addition, seven states tax groceries at lower rates than other goods and five states tax food, but offer credits or rebates on some of those taxes for low-income earners. Only two states - Alabama and Mississippi -- currently apply their states full sales tax on grocery items.
And what if it does?
The only way - apparently - to get through to the takers is to reduce their freebies. They clap like trained seals whenever leftist politicians make speeches about ‘fair shares’ but never having paid anything - fair or otherwise - into the system that rewards their sloth they really don’t have an idea of what it means to have one’s property summarily confiscated.
The poor are not buying food out of their own pocket. I read somewhere 40% of the family in America are on Food Stamps. This is a straw argument since a lot of food stamps are recycled/sold to buy booze and alcohol which is tax heavily.
Food? No. Well, maybe soda and whatever foods are currently subject to taxation.
Clothing? Yes.
Iphones? Yes.
Ipods? Yes.
Video games? Yes.
Lottery tickets? Yes.
Cigarettes? Yes.
Beer? Yes.
Medical marijuana? Yes.
Cable TV? Yes.
I don't understand this statement.
I don't pay taxes when I buy a home, maybe he means when you sell a home (but that's only if it's a huge gain, or income property.) But I do pay taxes when I buy a car (state sales tax.)
Thoroughly confused by what this statement means.
They already pay taxes on these things. It’s just that now the tax is hidden.
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?
Same with the flat tax or fair tax. Fair tax is fair until the congress starts preferentially giving out “prebates” to political interest groups for votes.
Haven’t they always said if you want less of something tax it! So let’s tax the poor more and maybe we’ll have less poor.
From my own experience - we waste so much food - it’s criminal.
Would suspect that ‘food stamp’ beneficiaries are just as wasteful.
Grocery shopping with a more elderly neighbor reminded me just how lucky we are to have such abundant food available at reasonable cost. Taxing food stuffs would encourage thrift and appreciation.
I don't know if his plan includes the prebate that the fair tax included to avoid this charge.
WHOPPING??
Can you explain to me how the current tax code doesn’t become 90% tax on the anyone making more than $50K?
Nope.
Nobody will be able to explain how you're going to fire tens of thousands of IRS employees, tax accountants, etc., either.
So does anyone have a plan to simply curtail or backstop the existing crazy code with a maximum taxation per person?
Or some “Alternative Maximum Tax” as opposed to the Alternative Minimum Tax.
To hell with Tax Simplification. I don’t care how you come to the number (indeed, other than Geithner’s example, TurboTax makes the most complex tax code relatively simple.)
I’m just worried about the size of the check I write at the end of the day on April 14.
After you explain in detail the 100,000 page current tax system. The most season IRS employees haven’t a clue, different answers for the same question for almost every question.
The economic ignorance of this article fairly leaps out at you.
He means there is no tax on used goods.
Leave aside for a moment whether Cain's plan is fair or not. It is a tax increase for most people in this country. If you would not vote for a candidate who states that he will raise your taxes and I wouldn't vote for him, how can we expect anyone else whose taxes will be raised to vote for him?
RE: 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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We get this question in almost every thread relating to tax reform. The answer is the same — ANY TAX REFORM PROPOSAL WILL HAVE THE SAME PROBLEM, so if the starting point of any discussion is let’s not do it because some future Congress will turn it into a steaming pile of dung, we might as well not propose anythimg.
Herman Cain verbally stated that together with his 9-9-9 proposal is a requirement that 2/3 of Congress will be needed to increase any of the taxes.
If that isn’t enough, then it isn’t enough for any tax reform proposal.
In the end, only the people’s vigilance will stop Congress from abusing its power. If we aren’t vigilant, we deserve the government we get.
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