>>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.