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 ...
Herman Cain has started a conversation about what new VAT taxes the government should impose. Real conservative /s
Ok, if he’s only talking Fed taxes, there needs to be major changes in state/county as well, cause in Maryland where Liberal DemocRATS rule, we are taxed till we squeak as it is.
From what I can understand, there are still tax loopholes with his plan - charitable deductions, “empowerment zones”? No sales tax on used items. It will be just as complicated as our current system by the time special interest groups get in on it.
I sell antiques - they are used - does that mean I won’t have to charge any sales tax? That could be a real boon to my business - whoo hoo!! I like those tax loopholes!
I still say it’s a gimmick - will never pass - just a way for them to insert new kinds of taxes that we aren’t paying yet.
—The problem with article is it ignores that fact that in exchange for 9% sales tax you get flat rate of 9%. That would offset a 20% tax on a car.—
I think he understands that. I think what he is saying is that once an individual (and that means, imagine YOU are buying a car) is faced with that sort of bump in the price based on sales tax, the individual will at least seriously attempt to find a way to avoid it. That is why he used the phrase “black market”. He is saying that giving people that kind of control over taxes (by shifting the collective 20% into sales tax), people will do what they can to avoid it. Legally and illegally.
The easy legal way is to just buy less: get a cheaper car. Buy used, etc. But there will be incentive to resort to “questionable” or downright illegal methods as well. And the more money that is involved, the more corrupt people become. One could, for example, get the seller to report the sale for a lower amount than it really was. Or the buyer could use some sort of barter to make up for some of the price. There are lots of ways to reduce the government’s knowledge of what really happened.
The key is that a 20% sales tax drastically increases the amount of money people save by avoiding sales tax. And this means the black and gray markets will significantly increase. Heck, look what happened when NY increased the cigarrette tax significantly. Tax revenue went DOWN because people left the state to buy large volumes of cartons of ciggies for themselves and their friends.
The author has a very good point.
It will be just like any other tax. At first, it will be just a sales tax on New items. Then it will expand to “select” other items, perhaps resold houses, but only on the amount over 100,000, then it goes to “used” antiques (heck, that a luxury, right?)
National sales tax is a killer.
What’s your substantive problem with the writer’s proposal?
If that is your hope, you would be likely disappointed.
Crooks can find a way around any tax, even the majority of sales taxes.
Every small business owner can do the same thing because businesses don't pay sales taxes on business items. You would be surprised what can become a “business item” when money can be saved.
If a farmer needs a new lawn tractor to mow his lawn, the farm business buys one. No sales taxes and the entire cost is ‘wrote off’ the business income. Ditto on new pick-up trucks, beef for the freezer, etc. ect.
Every business does it to some extent. Dope dealers would instantly invent a phony small business, if they don't already have one, many do.
The problems I see are that this will take longer than an election cycle. No politician is going to risk his seat falling on the knife for this. It is too complicated.
We need to pare back programs by increasing income through lower taxes, removed regulations and litigation — get EPA, ObamaCare and big government out of the way and watch the economy and a conservative ASCENDANCY take off.
Once the country is on more stable footing, that is when you start rolling back entitlements. To suggest this tax program now, would give Obama 4 more years
It's another tax. I want to expand production, not grow government.
Again, the national sales tax would replace the tax burden already embedded in the product. The price out the door would not change.
Under the current system, if you buy a wooden chair, the person that sells the wood includes what he pays in taxes in the price of the wood when he sells it to the mill. The mill includes what it pays in taxes in the price of the wood when he sells it to the manufacturer. The manufacturer includes what he pays in taxes when he sells it to the store. The store includes what it pays in taxes in the price for the chair. So the price of the chair includes roughly 20% in taxes. Under Cain’s plan, the amount of taxes embedded in each stage drops by 9%. The 9% gets added on at the point of sale and the out the door price does not change. The total price plus sales tax will be what you were paying before.
You pay income tax right now. Where do you get the money? From your employer. Where does your employer get the money? From the customer. It doesn’t change under Cain’s system except that money is collected at the point of sale instead of passing through your hands.
Good grief, it’s already becoming a tool for the liberals!!!
Raise the cost of electricity and fuel and EVERYTHING goes up. What an idiot.
Many states already pay an 8-9% sales tax. Adding on another 9% won’t stand. The economy needs cuts (not in medicaire or SS). Cut out the czars, the education department, the FDA, the Dept. of the Interior, foreign aid etc.
The gov’t is moving to allow foodstamps be approved for restaurant use. “Poor” people get free head start, while a mid-class family pays from 14-17K per child in child care. The free meals for kids has to be looked at. Many of these kids get two meals a day, while there obese parents (already on welfare) do nothing to care for the welfare of their own childen. Not to mention the billions of grants to bankrupt companies, just to get kickbacks to the RATS.
We do not have that now.
While it is true a new sales tax is added federally, Cain takes away two taxes while doing so. No more inheritance tax, and no more capital gains tax.
As to the arguement that government can simply grow the tax...two things. Government can grow the current tax, and it is much higher, 2nd, as stated, it would require a 2/3rds vote to do so.
Finally, Cain has also indicated that the sales tax is only on "new" items. Used item sales would be exempt.
IMHO, Herman Cain has the right attitude and message for renewal and restoration of America, her strength, her economy, and much, much closer adherance to and reverence for her constitution.
With the endorsement yesterday of Art Laffer, for Cain's 9-9-9 plan (Laffer is recognized as one of the brain child's of supply side economics), his momentum continues to rise.
999 is Mr. Cain’s trick pony. It will never happen in the form that he is proposng, will NEVER happen. Take his 999 plan out of the picture & what do you have?
A candidate that is extremely weak on foreign policy, apparently extremely naive about how congress works and inexperienced in working within the parameters of government structure, often speaks before he thinks when asked tricky questions. Why does anyone think he will sail into office and change everything around single-handedly?
Yes!!
You are discounting the fact that taxes can ALWAYS be raised and, historically, ALWAYS have been raised. So your objection, on its face, is simply to situation normal. The fact that future Congresses may try to raise tax rates is not a risk unique to the 999 plan.
However, here is what is unique about the 999: it actually makes the usual risk of later tax rate hikes LESS LIKELY.
Why?
Because under 999, EVERY person in America would pay the same income tax rate. Therefore, whenever ANY one Congresscritter wanted to raise tax rates, he couldn't get away with it without affecting 100% of the American population.
Today tax rates get hiked because so many people don't pay taxes, and so many people who do pay taxes have loopholes available to them, that it's easy for congresscritters to vote for taxes that don't affect THEIR constituents.
Under 999, EVERY SINGLE constitutent in EVERY SINGLE congresscritter's district would be affected by any tax rate increase (both income and sales).
That puts exponentially more accountability into the system than we have now.
Again, don't act as though tax rates can't and don't increase now. They do and WE USUALLY CAN"T STOP THESE HIKES because there are two few of us who are stakeholders. That would change under 999.
A bogus claim right off the bat. The overwhelming majority of people in this country are not self-employed so they don't pay a 15 percent payroll tax. They pay, currently, 5.56 percent so right off the bat Cain's plan is an increase for the majority of people in the country.
...- but would end the immunity that the bottom half has from paying any taxes at all.
Would someone please tell me why those currently paying little or no income tax would welcome a plan that will hike their tax bill dramatically?
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