Posted on 10/24/2011 8:29:20 PM PDT by smoothsailing
I figured it would be disappointing, but I had no idea it would be THIS bad.
This does nothing to fix the two major problems with our tax code, economy, and political system: 1) Tax freeloading, and 2) Special interest lobbying the tax code.
Under this plan, the 47% who pay no income tax still will pay nothing — because they can just choose the old system where they pay NOTHING.
Corporate income will still be double-taxed and hence still have the incentive to lobby for favorable tax laws. They will have MORE tax overhead because they have to calculate it under both systems to see which one gives them the lowest tax bill.
A better plan would be to eliminate the Corporate profits tax entirely and have upper and lower limits on the individual tax calculation: Simply pay 15% of your AGI with no rigamarole and be done —or— use the tax code to get it as low as 10% of AGI but nobody pays less than 10% of AGI. Gifts and inheritances are counted the same as any other source of income. Only the minimum 10% owed can be withheld from the paycheck or due in quarterly payments; the rest is owed on November 1st with your tax return ... just before election day so people still feel the sting when they vote. Total revenue from revised income tax is $1.4T.
Eliminate the worker side of the payroll tax, and replace the employer side with a 10% tax on all payroll costs ($800B) and expenditures to foreign entities ($200B). The tax on foreign expenditures effectively taxes offshored labor and imported goods at 10%. Total revenue from revised payroll tax is $1T.
These two revised taxes collect $2.4T, virtually identical to current income and payroll tax revenues.
Eliminating the Corporate profits tax while taxing the labor costs and foreign inputs will encourage businesses to be profitable, utilize domestic resources, and efficiently utilize labor. Unprofitable corporations will no longer be subsidized by profitable businesses.
Eliminating the worker side of the payroll tax will add that 7.65% back into workers’ take home pay. Self-employment tax will drop from 15.3% to 10%, boosting small businesses.
Ensuring everybody pays 10% minimum will give the “47%” crowd skin in the game so they care about getting the most for their tax dollars.
Ensuring nobody pays more than 15% means the most successful people can avoid punishingly high taxes without the BS of tax planning or lobbying and corrupting the political class.
This is a tax reform proposal that shows we’re a country that values success and doesn’t give anybody a free ride. Too much to hope for from any of these pandering politicians, I guess.
“Retirees are going to most definitely like it. Why would that group want to start paying a national sales tax?”
You’re right. I was talking to my mom who is retired the other day. She votes Republican but doesn’t follow politics much. But she had heard about the 9/9/9 plan and doesn’t like it. For folks living on Social Security and maybe a small pension like her, there’s not a whole lot to like about that plan.
>>>Retirees are going to most definitely like it. Why would that group want to start paying a national sales tax?<<<
Wasn’t that crazy!
...................................................
Herman Cain’s Mystery Adviser Revealed!
Thanks to some crack reporting by Comedy Central, the identity of Herman Cain’s top economics adviser has been unearthed.
In a Sunday interview on Fox News, Mr. Cain said that one Rich Lowrie of Cleveland, Ohio, was the chairman of his economic brain trust.
...snip...
A Rich Lowrie of Gates Mills, Ohio, gave $1,000 to Mr. Cain’s “Hermanator PAC” in May of 2010, and donated $500 to Mr. Cain’s presidential campaign this year, according to OpenSecrets.org. During the 2008 cycle, he supported Mitt Romney.
We can all rest a little easier now.
http://blogs.wsj.com/washwire/2011/09/20/herman-cains-mystery-advisor-revealed/
Sounds like a reasonable plan though I am not in favor of an inheritance or gift tax in any form... more double taxation to me.
See my long winded one at #33 above.
The moderator featured a different thread on the Perry plan so we won’t get much traffic here. Doesn’t matter, seems to be less debate and discussion these days than sniping and carping.
I think you both should consider submitting your ideas to all the Republican candidates, or your favorite one if you have one. You both make some good points.
I realize it isn’t a new idea, but I’m apprehensive about it devolving into a two-tiered taxocracy.
That is all fine and dandy but why does Perry open the piece by saying he is scrapping the current tax code when he is doing nothing of the sort. He doesn’t open this by talking about Conservatism and freedom to chose as you infer. He specifically uses the term SCRAP.
Scrap means something. When you scrap your car, you don’t give it to the neighbor kid to use or bury it to use as a septic tank. You take it to the junk yard to be crushed where it will never be seen again.
Words matter and I am looking at what a Presidential candidate is telling me. It doesn’t make sense.
I hear ya, I’m apprehensive of anything involving the federal government.
They are public domain now.
Thanks for posting Cut, Balance and Grow . This is a great plan in so many respects. Deductions preserved for mortgage interest, charitable donations and state and local taxes. No tax on Social Security benefits, no raiding of the Social Security fund and no estate taxes ! Perry gets it !
Thanks for the ping. It’s Flat Tax vs. Progressive Tax Classic. I’ll bet that Flat Tax wins.
BUMP!
Nice graphic!
Not at all. Everybody will still pay income tax, but those who use the flat tax will take up far less of the IRS time as well. Just like those who use the 1040ez vs. a full blown 1040 with schedules and so on. That will simply reduce the workload of the IRS. And over time more and more will use the flat tax as loopholse are phased out.
That's a marked contrast to Cain's 999 plan that would create a whole new beuracracy to collect and entirely different tax.
O’Reilly is reporting Gov. Perry will be on his show Tues. and then Charles Krauthammer will follow immediately to evaluate and discuss the interview with O’Reilly.
What fun.
lol
“He specifically uses the term SCRAP.”
With all due respect, I think you are reading way too much into this. Again, proponents of the flat tax over the years have typically used the word “scrap” to describe it was well. Because, for those who choose to pay the flat tax, the old, complicated IRS code is in effect “scrapped.” Newt has a similar plan and has used similar language in the past.
Look, it’s clear you’re not a Perry fan, and I’m not sold on the guy either. There are certainly things not to like about him, but from what I see, his (optional)flat tax plan is definitely not one of them.
I like most of your post #33.
The problem I have with eliminating inheritance and gift tax is that the giver did not necessarily pay tax on it, so it isn’t always double taxation. This is especially true if it is an asset that has appreciated over time but never been taxed because the gain has never been “realized”. If I buy a block of stock that is worth $10K and hold it until I die when it is worth $50K, my heirs should pay the income tax on that deferred $40K gain. It is not double taxation if the cost basis of the asset is not taxed, only the gain. Same is true if I gift that block of stock to somebody before I die. Or if the family business has increased in value but no tax was ever paid on its increased value because it was never sold. As an inheritance, it has finally changed hands and the gain should be taxed just as if it had been sold while the owner was alive. There is no reason cash inheritances should be taxed because there was no gain where income tax was deferred.
The criminal aspect to inheritance taxes have been the high rate that basically requires family businesses and farms to be sold to pay the 55% inheritance tax. With a tax rate of 10% on the gain only, that would happen much less frequently.
Wow. You’ve singled out the worst aspects of any tax system and you see them as desirable. Those deductions you like so much are two-edged swords. They are the embodiment of government social engineering, subsidizing some taxpayers’ choices and shifting their burden onto other taxpayers who’ve made other choices. This is how government grows — you unburden enough taxpayers to buy votes for any “good idea” because it seems “free” to them. Freeloaders never care what anything costs.
Do you also write suicide notes for people? sheesh if the world thought like you do no one would want to get up in the morning. No soldier would fight in a war and want to win. How sad to be you.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.