Cain's 9-9-9 Plan Gets a Closer Look

Wall Street Journal ^ | 10/12/11 | John D. McKinnon

[DRey]

Mr. Cain made it clear Wednesday his plan remained a work in progress. Visiting Concord, N.H., he added several new wrinkles. He would preserve the deduction for charitable donations, making the flat income tax not so flat; he would exempt any used goods, including previously owned homes and cars, from the national sales tax; and he would allow businesses to deduct new equipment purchases from their 9% corporate income tax, as long as the goods were U.S.-made.

Asked how that would apply to a computer designed domestically but containing Malaysian components and assembled in China, he replied, "I have no idea."

[org.whodat]

No one will vote for perry, given it up. And if you wish to see Cains real plan, which you do not, go to Neal Boortz and order his book.

[frogjerk]

A family of four at the median family income of $49,500 pays no income taxes because of child credits, etc. I've shown the numbers elsewhere, but under Cain's plan their purchasing power after 9-9-9 drops from around $46,000 to around $41,000.

Where in the United States does a family income of $49,000 = purchasing power of 46,000? You mean to tell me that this family is only paying 3K a year in combined sales tax, property tax, gasoline tax, energy taxes, sewerage, etc...? Please explain

[sklar]

Let me give an illustration. Suppose someone makes $15,000 or $20,000 a year from a pension or low paying job.

They DO, I REPEAT THEY DO pay Federal Income Tax of about 10%.

Under 999 that would "drop" to 9%... but there would additionally be a new Fed Sales Tax of 9%. No?

I went to Cain's website, it neither explains this nor addresses this.

[manc]

thank you .

[DTxAg]

5.75% + 7.65% (1/2 of FICA) = 13.4%

9% (sales tax) + 9% (income tax) = 18%

Only way she comes out ahead is if her company gives her a 12.25% raise when FICA taxes are eliminated. But since payroll taxes are not business deductions any more under 9-9-9 outside of empowerment zones, her employer now has to pay 9% on her payroll, which is more than the 7.65% it is paying now. Unlikely she's getting a 12% raise.

[relee]

And introducing a national sales tax without simultaneously repealing the 16th Amendment just ensures both sales taxes and income taxes will be around for a long time.

You are correct, Sir!

[frogjerk]

Let me give an illustration. Suppose someone makes $15,000 or $20,000 a year from a pension or low paying job.

Does someone with a low paying job pay payroll tax and does the employer pay a payroll tax? You have to subtract that before you can even start to compare the numbers.

[Rome2000]

His plan is retarded, but that's apparently not stopping the Cain Train.

Is this really the best the GOP can do?

Crazy thing is that come the primary I will probably have to vote for him due to the rest of the GOP field being even more retarded, save Gingrich, who apparently is too smart to be viable.

[justsaynomore]

You are still missing the 22% embedded taxes coming off the cost of the product.

The 9% sales tax is offset by the lower cost of the product.

This is the whole premise of the Fair Tax

[arthurus]

Cain used to say things that indicated strongly that he understands Economics and Choice. He is backtracking on these basic principles now and turning into Another clueless or statist Republican.

[justsaynomore]

You really don’t get it.

This is not about the plan or how good or bad it is.

It is because we finally have an outsider who is thinking outside the box on these issues.

Many of us realize it is a “dream” that it would even get passed, but he is setting himself apart as someone who wants to solve the problems not just talk about them.

[Repeal The 17th]

“...are you saying the POTUS can’t...EPA...DOE...Dept of Commerce...etc”
-
POTUS can’t do crap with any of those if congress does not provide the funding.

[manc]

Thanks for explaining it to me I do have more questions as taxes are confusing.

If they cannot make more tax then they do fees.
If this plan has a way to stop the left from raising all these taxes then good.

I do however worry for my MIL up north who is broke and has only $100 left after bills and that is leaving out some food and meds, half of them to be exact.
She lives like a hermit now, no car, lost a ton of weight, half of her meds and it does seem that this plan would hurt her more.
Can’t believe I’m speaking for my MIL
what is the world coming to. EEK

We have a 6% tax where I live on products we purchase
A wage tax
no state tax where I live
Now would the 9% take over the 6% we already have on what we purchase?

Sorry but taxes are not my strong point as you can see so I appreciate your time already.

[Artcore]

“Perry is a new entrant to the race. His plan comes out this week. And by the way, this is not a Perry thread. Obsessed much?”
_______________________________________________

Sure...whatever you say.

[Repeal The 17th]

“...Then repeal everything this clown has done...”
-
I do not communicate well, I know that.

What can the POTUS “repeal”?
The real power lies with congress, not in the presidency.

[Rome2000]

I have seem number from others that put that percentage anywhere from 15% to 24%

Middle class married working people filing jointly with 2 incomes and a mortgage who itemize deductions pay about 8-12% of their gross income in Federal taxes.

[Osage Orange]

You are naive....

[manc]

That is what OI meant to say, The new President with our new congress should follow the lead of the president and overturn the new don’t ask right away.

[Reily]

As I understand it the 9% would be on purchases of new products at point of sale. Prices should fall because there would no longer be double corporate taxation. How much I don’t know. Basically an individuals $15K to $20K income would then go much further, his(or her) buying power would increase.
Again 9-9-9 would be a transitional phase toward a fair(i.e. consumption)tax of some percentage. (I have seen figures that range from 15% to 30%.) It would capture the underground economy. Also I have seen fair tax plans that exempt food & rent. It’s a far better system then what we have now and it makes everybody a player with skin in the game. It’s the plan most free market economists say makes the best sense for our economy.

[Repeal The 17th]

“...You are naive...”
-
Enlighten me.