Posted on 10/18/2011 7:42:10 AM PDT by commish
This is a very simple, but hopefully accurate, analysis of what Herman Cain's 9-9-9 plan would mean to me. I make around $90,000 a year, and have rounded figures to get to exactly that for this analysis.
To do the analysis I took my current monthly pay, my current taxable amount, my annual tax refund, and my monthly 'disposable' cash after bills/savings/etc. I consider FOOD part of disposable as I can decide how much I spend on groceries.
For the purposes of this analysis I consider ALL disposable income as being spent and therefore taxed by sales taxes. I also consider the annual refund part of DISPOSABLE income though in reality it usually goes to pay bills or into savings.
First, here is my current situation:
Income $90,000 -- $7500 a month
Taxable income -- $7000 a month
State taxes -- $280.00 a month
Federal taxes -- $1412.60 a month (approx 20.18 effective rate)
After tax income -- $5307.40 A month
Disposable income after bills/savings/etc -- $2000.00 a month
Annual average tax refund -- $1200.00
Annual DISPOSABLE (IE sales taxable) income -- $25,200.00
Now under 9-9-9
Income $90,000 -- $7500 a month
Taxable income -- $7500 a month (notice for 9-9-9 it is all taxable now)
State taxes -- $280.00 a month (state tax does not change as state taxable amount stays the same)
Federal taxes -- $675.00 a month (9% rate)
After tax income -- $6045.00 A month
Disposable income after bills/savings/etc -- $2737.60 a month
Annual average tax refund -- $0.00 (no refund under 9-9-9)
Annual DISPOSABLE (IE sales taxable) income -- $31,651.20
Annual DISPOSABLE AFTER 9% sales tax -- $28,802.59
NET CHANGE UNDER 9-9-9 -- $28,802.59 - $25,200.00 = +$3,602.59
Bottom line, at the end of the year I have $3600 more buying power under Herman Cain's 9-9-9, and that is assuming prices stay stagnant when all indications are that prices will lower under 9-9-9 due to less tax burden on businesses.
That's a fair point, I've given it a little thought.
If you ask the average Joe what he pays in income taxes, they'd just as like as not have any idea. Or more odiously, they'd say "I take home $xxxxx".
My bet is that you'd get the same answer on Gas Tax, Property tax (I'm more informed than the average Dim, and I don't know specifically to the penny what I pay!) or any other tax that's "lumped in" with a payment, or a payment plan.
HOWEVER, if you ask people what they pay in Sales Tax, or what it cost them to register their car tags, or get their car inspected .....it's more than likely that they'll know. And maybe respond with an expletive ("$29 to get a @#$@#%#@sticker to put on my plates? $@%#$%@#%$@%$# politicians!!"
IMHO, that's why 9-9-9 is in general, a good idea. It's simple enough so that the general population can understand it, and they'll immediately see any changes that are made.
It's also the same reason why pols will ensure that it's never passed, or if it is, it will be so watered down as to be completely useless. It takes away all of the power to tweak this loophole for that Special Interest, while oversimplifying the process and putting all of the information readily in the hands of those who are taxed.
After they file for all the deductions and the minimum earned tax credit almost 50% of the population pays no federal taxes under the current tax code but under Cain the TALKER 9-9-9 tax plan they would be paying 9% tax on their income and without any allowed deduction plus another 9% on almost everything they purchase including the basics such as food and taxes.
You are intellectually dishonest, why are you even on FR? Why don’t you go spend time with OWS folks.
After they file for all the deductions and the minimum earned tax credit almost 50% of the population pays no federal taxes under the current tax code but under Cain the TALKER 9-9-9 tax plan they would be paying 9% tax on their income and without any allowed deduction plus another 9% on almost everything they purchase including the basics such as food and clothings.
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“Perhaps what wilco200 meant was that the average household defined as a family of four making a median income does not pay any taxes.”
Thank you. That is indeed what I meant. Got a little carried away. As my history indicates, I am against all taxes, support lowing all taxes for everyone and under NO circumstances instituting a new tax.
As far as Cain’s plan. I am against the 9% sales tax. I would be for a flat 9% income tax alone, however. The only way I would possibly support a sales tax of any kind would be a Constitutional amendment removing the income tax first.
999 replaces all of those taxes.
For those individuals who pay 0 in taxes, they still don't recoup their FICA and SS contributions, by eliminating both and replacing it with a 9% income tax they would be saving 6% off the bat in FICA alone.
That’s my take on the matter as well.
One or the other, not both. There is too much potential for mischief during the rare times that the opposition is in power.
Pretty hard to itemize without a mortgage deduction and come out ahead. So the incentive to do things the government wants us to do, and therefore rewards us with a tax deduction, disappears. No more social engineering, what’s a congressman to do?
Absolutely not, the tax credit they get form the minimum earned tax would make up for all their FICA payment.
How is telling the truth dishonest?
You like handouts, admit it.
Absolutely correct - the average American earns less than 50K
Those making under 50K or so currently don’t pay any Federal income tax.
Absolutely correct again - 30 million do not pay taxes now and unless they live in one of those empowerment zones they will start paying.
Yep, those making over 50K are licking their chops. The more you earn the more you will save in taxes. Do the math for 300K earnings and then tell us this is not a plan that favors those with high incomes and it doesn’t take a lot of logic to reason the lower income earners will have to make up the difference.
also end up paying less for what we buy, due to the drop of corporate taxes.There is no drop of corporate taxes.
9% of gross VS 35% of pre-tax profits is not a drop of corporate taxes.
A rough example:
At 35% a corporation earning 10% profit would pay 3.5% of their gross...Cain's plan is 9%
I totally agree that not every product will come down in price. Luxury goods always defy the typical supply/demand equation. Foreign manufacturers, too, as you note, may not be able to reduce prices.
However this is most important in discussion about the poor and middle class. Will their expenses go up or down with 999. The poor and middle class do not regularly if at all buy expensive bread, expensive soups, expensive foreign imported fruits and vegetables etc. They buy, generally, locally made and distributed foods and mass-marketed foods that have low retail prices. These manufacturers are price aware and cost aware. If under the new plan these products can be made for 15% less money, the low-costs suppliers are incetivized to pass that along in 2 ways. 1) fear of direct competition and 2) fear of indirect competition, as mid market products can drop their price 15% and, because those products have a prestige factor associated with them, the low cost supplier risks losing sales as the price difference vs quality perception gaps close between say for example Campbell’s and Progresso.
I think all 3 of those “foreign” companies build - or at least assemble - cars here in the USA. BMW builds some of its smaller cars and SUVs in Greer, SC. Mercedes builds cars in Vance, AL to build the M, R, and GL class cars.
They will start assembling the C class cars too. Lexus I think are built in Canada but Toyota has a huge plant in Hebron, KY.
I am not sure how the taxes work for those companies. Do they pay US income tax, or do they get to keep all the profit at home? I imagine if they have US holding company they pay taxes, even if they pass through a lot of their profit in the form of costs on imported parts. But surely at 9% they could consider restructuring if it suits them. In any event I still think a low cost of business is good for foreign investment.
That must be it. I was making $50,000, had a mortgage, property taxes, state taxes, union dues (forced to pay) and other deductions but always had to pay IN at the end of the year.
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