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.
Yes, but for the majority of people who actually earn a living, paying only 9% income tax and no FICA, Medicaid or Capital Gains tax will put so much more back into their pockets they won’t blink when purchasing that home or car. They’ll still be ahead.
The point is that the poor will be less poor, prices will be lower due to reduced corporate taxes. But I’d say that maybe we don’t tax food that has only one ingredient on the label: (e.g. beef, rice, potato, lettuce, milk).
No they can't...because that's exactly what will happen...with even bigger rates to come!
It sounds fair, yes. And if I'm paying income taxes then I think it's fair that everyone pays income taxes. But if I was one of those who, because of deductions and credits under the current system, isn't paying income taxes then I'm not sure I would consider a large tax increase to be all that fair. Why should they support the man who will do that to them?
There's more to it than some of the replies you've received thus far.
There is nothing *technically* stopping dems from raising taxes under ANY kind system - whether it be a straight income tax or Fair tax, BUT...
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?
The powerful wisdom of the plan is that it gives all voters a stake in keeping the rates low. Most likely, we’d see popular campaigns to lower the rate, not raise it.
To restate, the 9-9-9 plan ends the era of one group seeking to raise taxes on another to garner benefits for themselves.
Actually, I remember you jumping off the Cain train as soon as Perry announced.
That’s fine, to each his own, but let’s not pretend with this “I was a Cain supporter until 999” rhetoric.
It just gives you a convenient “out”.
I think the plan is stupid. It will lead to riots if he’s elected, but he probably won’t because the plan sucks all-around.
Why doesn’t he fix the spending under the current tax system? That’s the real problem with the economy. Once the system is fixed (read massively reduced), and the economy rebounds taxes can be reduced as necessary.
And just how will you guarantee that?
I'm not sure how much of the current price of food is taxes (I'm pretty sure some fair taxer can find this) but I know it's pretty substantial.
That depends on the state. In my state all food is taxed at 8.25%. Under Cain that goes up to 17.25%.
Lowering the business tax rate from 35% to 9% will cause the price of food to drop more than enough to cover the additional federal sales tax.
Complete nonsense. There is absolutely nothing short of government prices controls that will guarantee that.
he max tax rate is 17.19%, not 18%
The max tax rate is 9% on income and 9% on everything you buy. So the total percentage will depend on purchases.
employers pay a 7.65% tax for workers (1/2 of payroll tax) that is eliminated, so workers should see their base pay increase by 7.65%.
Why? Will the government require it?
workers pay a 15.3% payroll tax, which is eliminated under the Cain plan, so the max tax increase they'll see is 1.89% (17.19% - 15.3%).
Again, false. Workers currently pay 5.65% in FICA and Medicare. A 9% rate is a 3.35% increase.
becuase retail prices will drop, workers should end up with more money in their pocket under the Cain plan, even though technically their tax rate has gone up
And what will guarantee that retail prices will drop? Federal law?
RE: Why doesn’t he fix the spending under the current tax system?
THAT’s PART OF HIS PLAN AS WELL.
You have to understand that Herman Cain’s plan is (to steal a word) HOLISTIC. He’s going to fight for BOTH his tax plan AND a responsible, balanced budget.
He is on record as supporting Connie Mack’s PENNY PLAN to balance the budget for instance.
It’s not an either/or thing.
How complex is it to add to his website "used items exempt from sales tax"?
“Once the system is fixed (read massively reduced), and the economy rebounds taxes can be reduced as necessary.”
But wait - the whole argument against 999 is that greedy Congress is going to raise rates. Now you’re saying this same group will cut spending and REDUCE taxes?
I will admit that I changed my tag line after Cain's ill advised remarks about the 'rock'. I plan to change it back to "Perry/Cain or Cain/Perry" at some point soon but to do so in response to your post would seem a little disingenuous.
“prebates”
The so-called FairTax is a joke. Because of the prebate checks.
People here will nitpick and naysay based on whatever details of ANY plan that ANY body proposes. That’s fine. It’s still pre-season.
But Cain should be thunderously applauded for attempting to introduce OBJECTIVE fairness to the national tax debate. The soul of this great nation has already suffered immeasurably from the SUBJECTIVE fairness of progressive taxation and politically generous exemption.
Progressivity is, by definition, a corruption of objective fairness.
Obama is a superhero to the Left because he promises to muster strength to remove the concrete blindfold from the tradition of American Justice. Legally and economically speaking.
We can (and should) debate the details, but Cain already deserves regard as a great American Re-Founder for having the guts to put the blindfold back where the Founders originally tied it.
Which candidate has done the best job of putting the fat, lazy and thoroughly un-American protesters in their place?
Cain.
“General Welfare” does not, AT ALL, mean what libs assume. It means general in the sense that no specific groups, classes or individuals should either distinctly benefit or suffer from federal legislation. It is the Constitution’s recognition of objectivity as the ruling principle of the document. There is tragic irony in it’s modern redefinition.
I was talking about federal income taxes that are embedded in the base price of products, not the state sales tax.
Lowering the business tax rate from 35% to 9% will cause the price of food to drop more than enough to cover the additional federal sales tax.
Complete nonsense. There is absolutely nothing short of government prices controls that will guarantee that.
And competition.
If I'm the Kroger gocery chain, and I have the choice of purchasing from multiple suppliers, I'm going to purchase from the one that has the lowest prices. Kroger's cost of produce will go down because of competiton between food wholesales.
If I'm a consumer, and I have the choice of puchasing from Kroger's and Publix, I'm going to purchase from the one with the lowest prices. Grocery pricies will go down, because of competiton between Kroger's and Publix.
If you can't even grasp that simple point, that competiton forces prices down, then you don't need to be making economic arguments.
BTW, government price controls have historicly caused prices to go UP, because they stifle the competitive forces that drive prices down.
I still say it’s a stupid plan. There is No Way 50% of the voters are going to vote for a 9% income tax plus a 9% national sales tax in a bad economy with growing inflation. It’s absurd! They’re already squeezed as is, now the fed wants 18% more from them? Nuts!
An 18% federal tax added to <$50,000 incomes at a time of 20% yearly food inflation is POLITICAL SUICIDE. Heck, I make substantially more than that and I am totally against a 9% national sales tax. It’s ridiculous.
You know what the solution is to a 9% national sales tax is? It’s a R/T ticket to somewhere else.
This 9-9-9 plan has Fat Cat and Crony Capitalist ALL OVER IT.
R-I-N-O.
Cain 9-9-9 plan is a political disaster because he wants 50% of the population (including many of his supporters) which does not pay any taxes after they file all their deductions under the current tax code to pay 9% in income tax and another 9% in national sales tax on almost everything they purchase including food.
They have to reduce spending before they can reduce taxes. That means an Executive and Congress agreeing on massive federal cuts, as in entire departments. EPA, HHS, HUD, TSA, DoE, DoEd, etc. GONE and many others reduced to the point of de-regulation of the economy.
Dismantle crony federalism and the economy will rebound. No tax adjustments necessary.
“Dismantle crony federalism and the economy will rebound. No tax adjustments necessary.”
So, in other words, you are content with the current tax system, which effectively takes from the rich and gives to the poor, as long as the rates come down.
I’m content with removing the corruption first. You can’t set anything straight until integrity is restored.
Current tax rates and budget surplusses will be necessary for years into the future to fix the economic crisis. Otherwise the whole system is going down and another dark age is upon us.
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