Posted on 10/13/2011 11:02:38 AM PDT by justsaynomore
I think you could sell 9-9-9 to an economically sophisticated crowd, but it will never see the light of day. What Cain is signaling is a massive tax reform away from what we have now. It’s the willingness to innovate in a big way that is so attractive.
Your analysis has some merit economically, although I think it will lower prices on consumer goods net, net, net. It is also strongly pro-work. Coupled with ‘enterprise zones’ and school choice vouchers it would be phenomenal.
Politically, you’re 100% right. 9-9-9 is DOA, although I’d love to see the suppositions behind it. That said, Romney seems like GHW Bush to me. Perry seems like GW Bush. Neither excite me, but both are major improvements over Obama. It’s nonsense to say that Perry’s an outsider and Romney an insider. They’re both insiders and one or the other are likely to be our candidate.
“My other concern is that this will be a convenient excuse for companies who dump healthcare to refuse “cost of living” increases; i.e., “Hey your income tax just got slashed in half, you can buy your own insurance now and we don’t owe you an extra dime in compensation.”
Those increases are not owed. They are earned at the pleasure of the company. Just because you worked for a year does not mean you are entitled to anything but what you are supposed to be paid for your time, which was agreed upon at an earlier date.
No employer “owes” any benefit unless it is part of an employment contract. Companies do not exist to provide jobs for the economy or to be benefits administrators. They exist to maximize shareholder value and to return a profit. It is exactly this sense of entitlement that causes many companies to move overseas. Not only is it cheaper, but those workers typically are grateful to have a job that they had nothing to do with creating.
Laffer is an intellectual “big gun”.
This is very good for Cain.
The current system has approx 22% of taxes built into the cost of every retail item, which will be eliminated under the 999 plan and replaced by a 9% rate.
I should have clarified when I would be purchasing. I think you took a 25k cost of a car today and used it for when the 999 plan would be implemented. In that case, your numbers would be correct. However, if the plan is implemented, and the car I want is 25k at that time, then I would be paying, what, $3812 and some change on my taxes. Now, since I have to purchase or lease two cars when my leases are up, which are roughly within 1 week of each other, that tax will be doubled. That's quite a bit of money to drop, especially when none of it goes towards the principal of the car
But, even if I used today's purchase price and deduct the cost based on future price based on the 999 plan, I would still be spending $3200 on taxes on a 21k car.
But, I do understand your point that prices, in theory, should go down based on taxes rolled into the price compared to today's prices.
Which is more likely to get raised by congress? An in-your-face sales tax, or one of the multiple, low-profile streams in the current system?
I don't think Obama, Pelosi, and Reid care which way the taxes come. With the help of our Einstein poker player of a Speaker, they will get to jack up taxes this coming December when they decide on either raising taxes or gutting the ever living hell out of the military. Giving them the power of a VAT will just increase the ways they can get our money.
On paper the 999 plan sounds nice, but it will never stay that way, which pretty much makes Cain's pitch useless. I will go a step further and say this plan will never see the light of day. The democrats will never go for this, and we aren't in any position to secure the votes to pass an amendment to lock in those 9% rates.
I understand the need put forth an economic plan, but he needs to be realistic. He is not being exactly upfront with the American people when he says that this plan will pass as presented. He can present what he thinks should happen, in his expert opinion, to get this economy rolling, but floating this plan as sold is a bit much.
I'll close by saying that I like Cain. He's not my first choice, but he's my 2nd. Again, thanks for your response.
I agree that it's my choice, but I lease my cars for a reason, which is so I'm always under warranty, and b/c I utilize my money better with lower payments than I can by purchasing a vehicle. But as I mentioned in my response a few minutes ago, Brookhaven was taking today's price of a car and using tomorrow's 999 plan. I was using the 25k cost of a car with the 999 plan in effect. That's a huge tax. Even if I used Brookhaven's numbers, the tax is still over 3000 with the cost of a car being at 21k.
Third, as to everyone’s concern that 9% can become 20% or 30% in the future. This is true. It can. But our current tax rates can too.
Yes, they can raise my current income tax levels. But as of now, they can't rape me for what I buy. At least I get a courtesy lick with the current system. I can work around that with purchases. Fortunately I'm in Texas with no state income tax, and a relatively low sales tax of 6.25%. I feel sorry for the states with state income taxes, high property taxes, and high sales taxes. They will get the baseball bat rape with a 9% sales tax added.
I appreciate your response. I'm learning as I go about this plan. I'm finding things I misunderstood, and I'm learning things that scare me. Either way, this plan is DOA and will never see the light of day with our current political make up in the Congress. Congress doesn't have the balls to stand up to Obama now, so why should I think they would have the balls to jack taxes up on the nearly 50% who don't pay any taxes now?
Not “owed” per se, but corporation consider it part of your total compensation package. i.e., typically an employee will receive a net total compensation which includes salary and benefits paid for by the company. Dropping coverage of a $16,000 health plan is a $16,000 cut in compensation. Period.
We all know a sales tax is regressive, and a flat tax of 9% would even put some decent middle income earners with kids with all the tax credits having to come up with 9% of their 60k income, plus the 9% sales tax that they don’t have to spend now.
The plan if say implemented next year would force tons of people into bankrupcy. Now maybe they deserve and maybe they don’t, but it will happen. It seems to me that the only way you’ll get people on board with that plan is if lower incomes were brought into the plan in stages... increasing taxes by 1% in each category every year for incomes lower than 100k. I just don’t see this plan becoming a reality any other way unless their is massive wage growth.
If business taxes drop to 9%, prices for goods will drop and the 9% sales tax will most likely not be felt as a cost increase. In fact, with the cost of doing business going down, even with the sales tax consumers might see a small drop in the price of goods, even of cars, assuming Cain can gut the regulatory morass currently strangling us.
So we agree then? If the same basic problem still exists with the new system, then the new system is by definition not a solution for the problem.
It has been said many times before by Austrians smarter than I...it does not matter how you assess and collect the taxes if the overall tax amount to be collected is too high.
Tax policy reform is one issue. Tax burden is another...the most important.
We need an ALTERNATIVE MAXIMUM TAX law that is independent of all the meddling on the edges.
Something that gives people an incentive to achieve beyond their current productivity.
If you hit this limit, then you're off the hook. You can choose to write a check for that maximum tax and be done with it.
One possible example: If COLA for SS is 1%, then your MAXTAX may only increase that much as well year to year.
No reporting, no forms, no social engineering formula.
Married households often need two jobs to keep up with the tax mill.
If State taxes eat up this maximum, then the Feds get nothing. If California taxes are eating up the maximum, then the federal subsidies going into that state might get scrutiny from other states' congresscritters.
Suddenly, you've got Congress fighting over a limited pie. I don't care what they do after that, as long as they're fighting over money rather than printing it, and raising tax "revenue" is effectively taken off the table because the personal maximum tax dollar amount becomes sacrosanct...instead of a nebulous 9% number for some.
If Congress wants to play their games with prebates and offsets, fine. Let them. If I'm paying the maximum that a single person or family should pay to merely live...let's say it turns out to be $50,000 dollars, then that's that. "I paid $50,000 dollars to support the government...the most anyone can pay, I did my fair share."
Right now, "fair shair" is some vague notion, hidden by withholding, always not suite enough by the takers, too much by the givers.
And....if we can't decide that there's some MAXIMUM $ amount that people should pay for the right to be a productive citizen....then when a society can't do that, then all people are potential slaves. Which is what we have now no matter if it's collected as a flat or fairy tax, 999, 191919, IRS or VAT.
The hole in your analysis is if the car would cost $25,000 in the future (lets use 2014 for the year) under 999, then under the current system in 2014 the car would cost $29,167.
2014 car retail price if no change to system: $29,167
2014 car retail cost if 999 implemented: $25,000
The base price of the car would be $4,167 more than 999.
You nailed that one right on the head. As Cain pointed out in the last debate, that's the difference between him and a "Politician" -- a Politician thinks in terms of what he can get passed; Cain thinks in terms of what the problem is, and what will solve the problem.
We all know, in our hearts and minds, that it is right and fair that everyone pays tax for the BASIC services that our Government should provide (police, schools, military, for example). Most people, including (sadly) many on FR, think only in terms of whether it will affect their personal bottom line - their personal wallet.
What will fix this country is for all citizens to pay tax for the services we need and use (not talking about entitlement programs and government waste), for government to balance the budget just like her citizens are supposed to balance their personal budgets, and for everyone to live within their means and save for retirement, instead of expecting everyone else to support them.
As far as I'm concerned regarding the 9% tax or whatever sales tax does or does not end up happening -- that is the cost of the item. I used to live in Oregon, where there was NO sales tax. When I moved to a state with sales tax, it took me nearly THREE YEARS to get used to a $1.00 iced tea at McDonalds costing $1.09. But it is what it is. Just like a Hotel doesn't cost $100/night, it costs $115/night. And just like a plane ticket doesn't cost $300, it costs $328. The cost is the cost, no matter whether you call it the "retail price" or the "retail price plus tax."
It will be an adjustment, but everyone will get used to it. Change is hard, whether it's for the good or for the bad.
heh heh I'm not talking about any specific car here. I'm just running the numbers if I want to purchase a car that costs 25k with the 999 tax system already implemented. I don't have any particular car in mind. I'm just throwing out a number just to make a point. It could be 35k, 25k, or 19k.
If we use today's 25k cost of a vehicle against next year's implementation (where the cost of the car would theoretically go down before I purchase) or using a 25k price of a car with the 999 plan already implemented (where I pay 25k for that vehicle), I'm still paying over $3,000 in taxes for that vehicle.
My leases are up within 1 week of each other. I will lease 2 new vehicles within 1 week of each other. I could afford to pay the sales tax 2 years ago on both of those vehicles without having to roll the taxes into the cost of the car. If this plan were implemented tomorrow, and I want to lease 2 new cars at that same purchase price (regardless of car), then I would get popped extremely hard with taxes. That's roughly $7,625 in taxes I would have to pay on 2 purchases within 1 week.
That means that I will have to possibly purchase a used car (to forgo the federal sales tax)rather than lease a new one. That will cost me more money each month due to purchasing rather than leasing, and b/c of a much higher interest rate than purchasing a new car.
And all of this is if Cain convinces Harry Reid and Chuch Schumer to agree to his plan word for word, without any modifications, instead of compromising with them and ending up with a 14-14-14 plan.
I like that Cain likes to solve problems. However, Cain needs to deal with reality when it comes to saying his plan is guaranteed to pass in a Democratic controlled Senate. Hell, we can get a 51 seat majority and we couldn't pass this plan. We could get 60 seats in the Senate, and we wouldn't be able to pass this plan. That's just a reality of dealing with the differences between the private sector where one can have much control and effectively deal with issues, and having to deal with 535 (mostly worthless) congressmen.
I’m surprised he would support it, since it includes a sales tax and an income tax.
Agree, the regulatory morass is the albatross; my concern after Bush betrayed fiscal conservatives is that regulatory “morass” will keep coming back, even if Cain gets rid of it. We had the repeal of Glass-Steagel, and now we’ve been bludgeoned with Dodd-Frank. We had cutbacks in Washington bureaucracy, and now we’ve got DHS.
Regardless of anything else, Cain needs to stump on more than 9-9-9. He needs to step REAL careful and begin talking TO the unemployed about job creation. Although he’s right about OWS protestors, he risks coming off as being callous toward the unemployed as a demographic.
What do the people think about the plan (Mark Levin poll)?
Currently:
60% - Yes
21% - Don’t know enough
18% - No
The first scoring of the 999 says it will create 6 million jobs. It isn’t “just” a tax plan, it IS a jobs plan.
The question I have is regarding reality. Do you, or any of the supporters of 999, realistically think that this plan will pass the Reid controlled Senate? Cain has stated that his plan, as written, will pass.
Let's go a step further and say that we take over the senate with 52 votes. Do you or supporters of the 999 plan think that (insert majority leader here) will get 60 votes to overcome a filibuster to pass this plan?
Let's say Cain gets elected. He has showed his cards by laying out 999. That's effectively the starting point in negotiations. If the congress decides to completely scrap the current system and raise taxes on 50% of the population (yes, they free ride now, but it's still a tax increase), do you or supporters of this plan think that it will get to Cain's desk at those 999 rates, or do you think Harry Reid and Schumer would only agree to 15-15-15 (or any higher number than Cain would start at)? Lord knows our House leadership doesn't have balls, so they won't push back against
The point I'm making with these questions is that Cain has presented a plan that, in my opinion, has absolutely 0% chance of getting passed. If I accept that premise, then I have to accept that Cain's backbone message is for naught. That's his golden ticket, but the ticket is null and void based on reality.
I hope Cain realizes this and presents different plans that can help get this country moving.
He has promoted ideas for job growth all along. Prior to this bold step, he also promoted reducing the corporate tax rate to 25%, stop taxing repatriated profits, cutting regulatory burdens on businesses, eliminating the EPA, and more.
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