Posted on 10/13/2011 5:19:07 AM PDT by Cincinatus' Wife
Herman Cain's "9-9-9" tax reform is attracting enough attention to become the focus of this week's Presidential debate. As a plan for overhauling revenues and unleashing the private sector, it's a bold gambit that shows Cain is willing to take chances and shake up the Capital.
The 9 percent business tax is a stroke of genius. It would give us the lowest business rates in the world and would make us the "tax haven" for investment from everywhere. The stock market would barely be able to stay abreast. The 9 percent personal income rate would eliminate all the deductions and put everyone on a level playing field. Tax collection from "the rich" would skyrocket because no one would hide income anymore, but "the other 99%" would make out as well. Cain's plan would fold in the 15 percent payroll tax so the new 9 percent rate would be an improvement - but would end the immunity that the bottom half has from paying any taxes at all. Altogether a good show.
The stickler is that 9 percent national sales tax. That's where things start to fall apart....
The sales tax has long been the preserve of the states and is now imposed in all but five of them (Alaska, Delaware, Montana, New Hampshire, and Oregon). The informal arrangement has been that the federal government gets income taxes, the states get the sales tax and local municipalities are granted the property tax. Often they poach. States and even cities have imposed income taxes and have also started trespassing on the property tax. But for the federal government to demand a 9 percent sales tax would be a whole new departure. Combined with state and city levies, it puts us near 20 percent, which is black market territory.
(Excerpt) Read more at spectator.org ...
If you are self-employed as a property manager, basically, you don’t pay SE taxes?
Never heard of that.
If you’re just taking passive rental income, I could see that. If you’re truly self-employed and your business is rental properties, I never heard of that being handled differently.
I just don’t see what’s so impossible about collecting and accounting for a national sales tax at the point of purchase.
State and local governments do it every day, on every purchase. Some online retailers collect state taxes nationwide and manage to pay them to the respective states.
Correction: 71,000 pages.
If Laffer is out there already really going to bat for this, that’s amazing!
I would think conservatives would be jumping for joy that we are finally getting a viable candidate who is proposing MAJOR MASSIVE TAX REFORM and getting traction on it.
Do you agree that raising the taxes on more than half the people in the country my be detrimental to economic growth?
A claim is not "bogus" simply because it doesn't apply specifically to your particular situation.
A claim is bogus when it's flat out false.
The fact is that whether it comes from self-employed or employee+employer shares, under the Cain plan, the 15% payroll tax (again, regardless of whether it's paid in one shot or two) is returned to the economy for private use.
But you cannot use the 15% FICA figure when you claim your tax plan will result in a tax break for those at the lower end of the spectrum because it flat ain't true. The vast majority of people pay the 5.65 figure.
Like you say, stores collect sales tax every day.
The issue, as I understand it, is when you get to the level of taxation that cause the black market to thrive. My state tax of 7% plus Cain’s 9% gives 16% and starts getting close to black market level.
But the holiday is ongoing. And Obama is trying to extend it, so using the 5.65% figure is accurate. Far more accurate than the 15% Cain is claiming.
And since, under the present system, only the about 50% of us who are paying taxes would be affected by the tax hike, once again we’d have little political power to resist the assault of the parasites on our earnings.
My problem isn't with the rates in the 9-9-9 plan per se. My problem is that I'd really like to win this upcoming election and spare this country 4 more years of Obama. Nominating a man whose central plan is raising the taxes on over half the population is not the way to do it. People aren't stupid, even the poor and middle-income. Why should they vote for someone who is going to cost them money?
Yes, considering half the country probably pays little or no income taxes I would expect a sizable percentage of them to vote Republican. Except for a Republican who will double their taxes that is.
That half of the people who pay no federal income tax vote overwhelmingly for Democrats. They helped elect Zero. Was that economically detrimental enough for you?
Now imagine 100% having to pay some federal income tax. How enthusiastically are they going to support the Democrats' anti-growth policies then, when *they* have to help pay for it all too?
No, YOU are!
(Seriously, you have made the best points on these important discussion threads. What is happening here will be happening throughout our party and the nation over the next year. It’s good to get warmed up.)
I expect them to take steps that are in the best interest of their shareholders, the only group that really matters. Cutting prices doesn't do that. Increasing margin, paying down debt, raising stock prices, increasing dividends do. The fact is that none - none - of the cost savings corporations have employed so far has been used to reduce prices. Why should lower taxes be any different?
A corporation cannot stay alive without earnings. And it can’t keep investors without earnings, either. So its bias will always be toward increasing earnings (sales) if that is lagging.
And what better way to improve earnings than to cut costs and increase margins? In your world, the corporation will cut prices and pass all savings on to the customers, thus reducing gross earnings and leaving profits flat. That will cause a nosedive in stock prices. And won't that make the shareholders happy?
Also, putting costs savings toward investors still helps the economy. Investors are also consumers.
True. But the argument is that cutting taxes will result in lower prices thus offsetting the increase in taxes for the lower income people. Putting cost savings towards investors, as history has shown they will do, does not accomplish that. So it further weakens Cain's claims.
But corporate views are towards the end of the current quarter, not the quarters years in the future. They are concerned with meeting current goals. Passing savings from lower taxes on to their customers won't accomplish that.
IOW, this group, whoever they are, start with the assumption that corporate tax rate cuts cause long-term revenue losses. That simply is not correct. Or at the minimum, it's not indisputable.
But that's not the conclusion that is important in this case. The important conclusion is that there is virtually no evidence that lowering tax rates will lead to lower prices. That is the finding that invalidates Cain's claim. Lower overall rates, while a given, are a separate issue altogether.
Gross personal income will decline.I'm self-employed. Why would my personal income decline?
Remember at the time of implementation, all existing inventory will already have a full tax burden embedded. You would not be able to literally flip the switch without blowing a fuse.You might want to read the Fairtax legislation, it's already taken care of there.
Sorry, but just throwing out numbers that magically compute doesn't impress me...it makes me even more of a skeptic...hence my tagline
Your contempt for the middle class is noted. However, if you're convinced that over half the people are Democrats then how do you expect to win another election?
Now imagine 100% having to pay some federal income tax. How enthusiastically are they going to support the Democrats' anti-growth policies then, when *they* have to help pay for it all too?
If a candidate ran on a platform of more than doubling your taxes would you vote for him?
And any competent corporate CEO can understand that a company that can cut its costs and keep its prices constant will make even more money. Why would they settle for flat profits when they can get increased profits?
That is what would happen in the entire economy. Prices would go down, volume of sales would go up, economic growth would be wonderful.
Pie and ice cream would grow on trees. There would be a unicorn in every garage and a phoenix in every pot. And we would all walk down the road singing.
And your contempt for us soon-to-be-minority who are paying all the federal income taxes, is noted.
However, if you're convinced that over half the people are Democrats then how do you expect to win another election?
Because Zero is such a disaster, a lot of Dems won't even be able to fathom another four years of him. 2012 is going to be an election like 1980. And it will be our best, and probably last, chance to save ourselves from total collapse. The 49% that today pay no federal income taxes, used to be just 35%, then 40%, then 45%. Pretty soon that 49% will be 50.1%, and if we still have this same tax system at the point, it is GAME OVER.
We minority of working suckers will forever be outnumbered at the ballot box. The tyrannical free-loading majority will keep voting for and insisting on higher and higher taxes us who are paying for it all.
I’ll tell you this: within a few years, when today’s 49% becomes 50.1%, we’re going to see top marginal federal income tax rates going back to 90% or more, capital gains taxes going through the roof, massive taxes applied to 401(k) and IRA withdrawals, etc.
And it will be due to the stupidity of those who don’t see this obvious train wreck coming and realizing the only hope of stopping it is to get *everyone* paying some federal taxes so that *everyone* will feel the pain whenever Fedzilla proposes more spending binges.
Answer the question. If a candidate ran on a platform of doubling your taxes would you vote for them? Yes or no?
We have no federal sales fax to raise, once it is instituted it is there it is there forever for politicians to play with. Taxes are immortal.
If it were a choice between higher taxes and something worse (systemic collapse, unemployment), then definitely yes.
Now turn it around. Cain is the only one talking about tax reform. None of the others is proposing anything that would stop the trend I just pointed out to you — that every year there are fewer and fewer of us paying for more and more who don’t.
The status quo guarantees that taxes will increase for we 53% who are paying it all now. So why should we 53% vote for any candidate who refused to fundamentally reform the tax system?
Fax = tax.
Darn swype
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.