I have questions about the 999 plan, too. How soon would the Federal income Tax be phased out? Would the tax be excluded for the sale of one’s home? Would medical, dental and prescription drugs and groceries be exempt from tax? I understand that the tax would be paid only on new goods, not used goods. It would be very wise for Mr. Cain to put out a complete explanation of his 999 plan.
Like we all know everything that’s in the healthcare bill passed into law over a year ago.
“I have questions about the 999 plan, too.”
“How soon would the Federal income Tax be phased out?”
Instantly. It is replaced by a 9% flat tax on personal income with no deductions except charitable giving. This 9% also replaces the 7.65% Payroll Tax paid by the worker. So where a worker now pays 7.65%FICA + xx%IT, they would pay only 9%IT. This benefits those who actually pay more than 1.35% income tax now, but costs those who don’t earn enough to pay more than just Payroll Taxes now or even have them rebated by the EITC and other credits.
“Would the tax be excluded for the sale of one’s home?”
If it is an existing home, then there is no sales tax. If it is a new home, there is the 9% sales tax.
“Would medical, dental and prescription drugs and groceries be exempt from tax?”
No, of course not. All new goods are included in the sales tax, just as you now purchase them with after-income-tax-and-payroll-tax dollars. Unfortunately, services ARE excluded, which I think is a bad idea. If rents, haircuts, entertainment, doctors visits, etc. were included, the rate would only need to be 3-4% rather than 9%. If States did the same, the COMBINED Fed+State sales tax would be under 9%.
You didn’t ask, but the third ‘9’ is the business flat tax which replaces the Corporate Income Tax and Payroll Taxes paid by businesses. It applies to the total receipts of a business after deductions for purchases from other businesses; but not for labor and not for purchases from foreign businesses. So it is essentially 9% of labor plus profits plus foreign inputs. This means that a Toyota dealer can’t deduct the cost of goods sold and the 9% applies to essentially his entire revenue, making a Toyota 9% more expensive than now. A Ford would not be a full 9% more expensive. Although the 9% would apply to foreign parts and the US labor costs, this would be only slightly more than the Payroll Tax Ford now embeds in the price. This 9% is separate from the 9% Sales Tax, which means the Toyota would actually be 18% more expensive and the Ford perhaps 10% more expensive. You are supposed to be overjoyed at this because you were able to take home 91% of your paycheck instead of the smaller paycheck you now have.