The 9-9-9 plan makes much of end of payroll taxes offsetting the sales tax, but retirees have already paid payroll taxes and now they pay income tax on their pensions and withdrawals from 401ks. So retirees appear to pay 18% with no offset via the end of payroll taxes. Why is this a fair deal for retirees or workers who have already paid payroll taxes for years? (This is not a statement, I’m looking for an answer.)
2. Your contributions to your 401k avoided a 28%+ (?) marginal income tax rate. They will eventually be taxed at 9%. Sweet deal for your generation!
3. We need a humming economy to be able to afford to keep your checks coming from the earnings of current workers who have little hope of receiving the same benefits without drastic change.
4. The sales tax will merely reveal the embedded tax in goods, not necessarily increasing the total cost.
5. If those whose earnings become your monthly check are celebrating this plan, you might want to keep the golden geese happy by supporting it too.
6. It might cost you something to save our nation from socialism. Wouldn’t that be worth it?
Actually, for most people, the 401K avoided their tax for the purpose of paying a much lower tax at retirement, since we wouldn’t be making nearly so much money as retirees. In exchange, ALL the money in 401K gets taxed as INCOME, even if the gains were capital gains.
Turns out that, under ordinary assumptions, a good number of people would have been better off paying tax on the income, and investing it in funds that didn’t churn their assets. Assuming they doubled their money over their lifetime, the amount they would save being taxed at the capital gains rate on their earnings would have far outweighed the initial loss to income tax.
That is the theory behind the ROTH Iras, that for many people it’s better to get your earnings tax-free, than to defer your initial income.
I wonder if Cain is throwing out ROTH IRAs as part of his plan. Does he even address IRAs?
The point the original poster makes is that if you no longer pay payroll tax, but still have income, Cain’s plan is much worse for you, because you get no benefit from the 15.3% payroll tax cut, but you pay sales tax to “make up for” the payroll tax cut.
The pre-bate would help this, except Cain opposes a pre-bate because he doesn’t trust politicians not to make it an entitlement.