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."

[justsaynomore]

All I can say, is that if you look at the models under the Fair Tax, they show the cost of everything coming down.

That is under a 23% sales tax.

999 pretty much does the same but spreads the percentage across 2 areas instead of one.

So it is possible that your mom could end up with more at the end of the month than $100

It is also possible that there will be more help for her from charities because giving to charities will be huge.

Or it may be it’s time to bring your mother-in-law to live with you :-)

[sklar]

Thanks for your answer!

[Noamie]

Our current, Progressive, Tax system does not work. And everyone here knows that.

It rewards the evader and the corrupter.

It punishes hard work.

It corrupts Government.

It discourages saving.

I’ll take just about anything else. 9-9-9 is a good start.

And, no, I don’t care about the “poor” in this country whom all have cars, XBoxs and cell phones and who live a lifestyle that is financially better than the average middle class European and who pay NOTHING right now.

I have some really, really rough thoughts here, but how does a gallon of milk cost more IF:

1. You remove the payroll taxes (what is that 9-11%?)
2. You drop the Corporate tax rate from about 25-35% to 9%
3. You fire half of your accountants and all of your K Street lobbyists
4. Probably some other bs taxes I don’t know of...

[TomGuy]

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.

22% embedded (sales) tax plus current income taxes is how much greater than the 27% from Cain's 999?

If Cain's 999 is implemented who makes up the difference in the loss over current revenues?

Cain's plan does not address that, nor does it address overall spending. Until spending is addresses, Cain's plan, per some estimates, falls short by some $280 Billion annually. Where does that difference come from?

[manc]

YOUR LAST LINE IS OUTRAGEOUS

LOL

Seriously I do appreciate you taking the time for me.
The Fair tax I thought was getting rid of fed tax and just over the board flat tax on what you purchase which I like.

This seems to be an added tax for making less than 20 grand and my MIL but I’ll look this up more , thank you.

You know the left is going to go nuts about this and scare the likes of my MIL and that is why I am trying to get the facts right now before the left attacks this plan.

[Osage Orange]

Look at what the EPA has done in the last 3-4 years....

[DTxAg]

Where in the United States does a family income of $49,000 = purchasing power of 46,000?

I looked at federal taxes ONLY, as the 9-9-9 plan does not change local or state taxes. Posted something like this the other day.

Median household income in 2010: roughly $49,500

Under Current Tax System:
1. $2,796.75 in Social Security and Medicare taxes personally.
2. $3,786.75 in Social Security and Medicare taxes from employer(s).
3. The $49,500 is treated as a business deduction, so no corporate taxes are owed.
4. Assuming a married couple filing jointly with 2 kids, there is a $11,400 deduction, and $14,600 in exemptions.
5. This gives you $23,500 in taxable income, for a total tax of $2,615. But they also get $2,000 in tax credits plus others, so they owe $0 in income taxes.
6. The household therefore takes home $46,703.25 after taxes, and the employer(s) paid $3,786.75.
7. From the employee's perspective, $5,148 has been credited in the Social Security system for the employee's retirement.

Under Cain Plan:
1. $0 in Social Security and Medicare taxes personally.
2. $0 in Social Security and Medicare taxes from employer(s).
3. The $49,500 is not treated as a business deduction, so $4,455 in corporate taxes are owed.
4. Assuming a married couple filing jointly with 2 kids, the household owes $4,455.
5. The household therefore takes home $45,045 after taxes, and the employer(s) paid $4,455.
6. From the employee's perspective, $0 has been credited in the Social Security system for the employee's retirement.
7. The 9% sales tax reduces that to around $40,990 in spending power.

[palmer]

Just the opposite. It lowers taxes on production and capital, allowing domestic producers to be more competitive.

Quite correct. If anything it penalizes pure labor service industries by disallowing the deduction of salaries. Once DRey figures that out (maybe next week) he will be whining about that.

[justsaynomore]

No. 22% is how much tax is “hidden” in each thing you buy. That amount goes down. The cost of things goes down. That offsets the SALES TAX 9%

15.3% is the payroll tax. That goes away. That offsets the INCOME TAX 9%

25-35% corporate tax goes away. That offsets the 9% business tax.

So ... it is actually is 15.3% payroll plus income tax plus 22% embedded tax plus 25 to 35% corporate tax compared to Cain’s 27% It is a tax CUT.

WHy is it lower? Because MORE people are PAYING.

[Repeal The 17th]

“...what the EPA has done in the last 3-4 years...”
-
Do you blame Obama for that or congress? (I blame congress)

[Rome2000]

I appreciate Cains outsider status and applaud it, but the communists will strangle him with the 9-9-9 plan if he gets the nomination.

He needs to start talking about decimating the Washingtonian apparatchiks and the DC bureaucracy, haven't heard anything about that from him, seems to me like he's angling to be FLIP SLICK WILLARD RINO ROMNEYS running mate.

He needs to man up and attack Mr. funny underwear military service avoiding from a family of military service avoiding cowards and con men son of a polygamist born on the run in Mexico , all I hear so far on that score is crickets chirping.

[Reily]

For example in theory a two income family could bank the entire 2nd income.

[palmer]

Good analysis, but the fact is that $0 is currently "credited" towards any employee's retirement in Social Security, every penny is spent by the politicians. I use the normal meaning of credited not the surreal political meaning.

What I like about your analysis is that is shows there is no more free lunch for the middle class which really means no more free lunch for America. We have reached the end of our ability to borrow and spend our way to prosperity and now we all (including the middle class) have to pay for our past borrowing and wasteful spending.

However what your analysis doesn't show is that the flat corporate tax sets the stage for a huge revival of high productivity manufacturing in America. Also this sets the stage for the current social security ponzi scheme to be wound down with current and imminent retirees getting their promised benefits but no more fake trust funds for future retirees.

[WestSylvanian]

Yeah, you buy a used car except that they are in short supply and their price has gone up because a lot of them were crushed by Obama’s cash for clunkers fiasco.

[nonliberal]

You are forgetting that there is a 9% payroll tax that would replace the current 15.6% payroll tax. That is a tax cut.

There are currently 23% sales taxes built into the prices of all goods. Cain would reduce that to 9%, thereby reducing prices. That is a tax cut.

Income tax would be a flat 9%. That is a tax cut.

[DTxAg]

What I like about your analysis is that is shows there is no more free lunch for the middle class which really means no more free lunch for America.

I've said before that I'd love to see an equal tax rate on everyone, but running for President on a tax plan that increases taxes significantly on the middle class is not a real smart idea.

[DRey]

English isn’t your first language, is it?

[DRey]

Used goods are not taxed. Yes, I’m for Perry.

[DRey]

Make no mistake, they ALL mind scrutiny.