Posted on 10/18/2011 7:42:10 AM PDT by commish
No it would not be. All interest taxation and cap gains taxes are eliminated.
“It is nearly impossible to evade taxes”
High sales taxes create black markets in goods.
You will have to do better. I read comment #1 and it explains nothing about your comment.
Untrue.
15% is both the employer side and employee side. Only the 7.5 employee side is a guaranteed savings to the employee. The employee half is presumed behavior.
By the way I agree with Beagle8u’s comments and I don’t understand why you attacked him/her. For retired folks who will not get the benefit of the reduced Fed Income Tax, it may very well be a increase because of the Fed Sales Tax. In that sense it is very redistributive to retirees with savings.
>>I don’t think you are correct. His site states:
“Gross income less all purchases from other U.S. located businesses, all capital investment, and net exports.”<<
Well, “Gross income” is Revenues, and “purchases from other U.S located businesses” is what I called “raw materials, products, utilities, etc., purchased from suppliers,” so I don’t really see how I’m incorrect in stating what I stated. Granted, I ignored capital investment (I was including it in products purchased from suppliers) and I ignored net exports in my explanation...
That plus the fact that I have my own business as well as being an employee.
Cain’s plan will probably put me ahead after all is said and done even though I don’t make much money at present. The FICA and Medicare taxes make a significant portion of my income.
“High sales taxes create black markets in goods.”
Used goods are not taxed under the 999 plan, so insofar as that goes the point is mute.
As for “Black Market” sales, that money will get washed into the system at some point. Under this plan even drug dealers will be paying some taxes - when they buy a new flashy car, or buy a gold chain, or what have you. They money they make has to come clean at some point. Sure some people will evade some taxes, but how is that different than today?
The point of a system like 999 is to create a system where everyone participates, that gives the fewest chances to evade, and least opportunities to evade. Most retail sales are made by giant corporations (Amazon, Target, WalMart, Best Buy etc) that are the least likely to allow you to evade them and the most likely to appreciate the flat tax on profits. Take total sales minus cost of goods minus cost of employment and rent and electricity etc, and what is left pay 9%. No fancy accounting, amortization of display racks, depreciation of trucks and forklifts etc. Easy. A simple plan makes it easy to comply and less desire to cheat.
Are you saying you believe the gross income upon which the 9% would be paid would not allow a deduction for employee wages?
Thanks dervish.
>>Are you saying you believe the gross income upon which the 9% would be paid would not allow a deduction for employee wages?<<
Yes, that’s what I’m saying it would operate. I don’t “believe” it; that’s exactly how it’s described in the plan itself.
Cain’s business “profits” tax, as he has described it, would not allow wages to be deducted from revenues. That is what makes it look like a value-added tax (VAT) instead of an income (or profits) tax. A company could have a loss for the year after paying all expenses (including wages) and still owe 9% on a significant amount of its revenue. It is certainly not a profits tax, unless you define “profits” much differently they we usually think of profits.
It’s not necessarily a bad plan in total, but too many people are erroneously assuming it cuts business taxes, when it might actually increase them, so product prices are unlikely to fall as a result of the switch to his 9% business “profits” tax
Thank you for pointing this out. Before you said it I did not understand that.
So in reality it is an 18-9-9 plan.
What worries me about this is that it is a disincentive to hire and to pay good salaries.
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