Any thoughts on this plan? I kind of like the direction it is going (even if I will have to pay more in taxes). Everyone pays a base of 9%. Everyone pays 9% federal sales tax. All corporations pay 9%. Since I already pay over 10% income tax this will increase my taxes, but I can control, to a certain extent, the amount of increase. I think this also indexes for the economy and economic status. The better you are doing, the richer you feel, and the more you spend. The wealthy would pay more since they have a more spendy lifestyle, while the poor would pay less since they don't spend near as much.

 

It appeals to me too, which probably means it doesn't stand a chance in hell of "flying".

But, it's important to remember that the President does not make "tax laws". Congress does.

- Jack

 

Some ways I like it, some ways I don't. In Texas, we have a sales tax. In most areas it's basically 8% and that's for city sales tax and state sales tax rolled into one. If you add another 9% to anything you buy, that's getting expensive and probabilities are high that it's going to effect the economy in a very negative fashion. And what's with the first 9%, just because? So basically the plan is that you'll give the feds 9% when you buy something and another 9% of everything you make. Sorry, that's outrageous. And then you'll watch as cotrporate America goes up on prices because I can assure you no corporation is going to dip in their pockets for this 9%, the consumer is going to pay it. So now we're stuck with 9% tax just because, an additional 9% tax on what we make, and pay an additional 9% tax for the goods we buy. Why on earth would any Nation think that a tax rate at near 30% is a good thing? Add state and local taxes, property taxes, and the worker might as well be on welfare- it'd be a lot cheaper. That means that for every dollar you make, you're going to give the Governments over 50 cents of it.
While I don't like the IRS and we certainly need to have some kinda tax reform, this ain't it. If you went to a sales tax instead of an income tax, how many more would be unemployed? There would be little use for the IRS and their *****. What about low income folks? We have folks here still making minimum wages. A decent job around here is $10.00 an hour, what about those folks? Lowes, Home Depot generally pays about 10 bucks, what about their employees? Do you expect them to be able to give up half their paychecks? Sorry, it ain't gonna happen. It sounds great in a speech but the reality is we are not all making the same paycheck.

 

Federal income tax is unconstitutional.

The only fair tax is a federal sales tax. Poor people spend less money, hence they pay less taxes. Rich people and corporations buy a lot more and spend a ton more money, hence higher % of taxes.

The federal income tax is so severely flawed. If you're going to do an income tax, which I don't agree with, it should be a flat percentage across the board. 15%, or whatever. 15% of 50K is alot less than 15% of 100K which is alot less than 15% of 1M.

It should also be one or the other. If you have an income tax, a sales tax should not exist, or vice versa.

 

I agree that a straight sales tax would result in high unemployment for those making a living off the current tax scheme, but I also think it is a much fairer and better option than what we currently have. Many of the IRS agents already in the field can be put to better use finding companies paying under the table to avoid paying taxes or those selling off the books to avoid taxes. I didn't say or think Cain's idea was perfect, but I like the idea that it is flat so we can see and yell from the highest mountains at our Representatives if they start screwing with it. With the system we currently have there can be many changes made and we never know what hit us until April 15th. I hate to do it, but paraphrasing Obama, transparency is a good thing.

In 1depdland the only federal taxes would be sales taxes on retail sales only. It hits everyone and is much easier to enforce.

 

I like it. No doubt, something needs to be done. And fast: http://www.ft.com/intl/cms/s/0/071f9...#axzz1Z6ugsCUY

"Mr Kent argued that US states did not compete enough with each other to attract businesses..."

And most of those states can't compete because of unions and onerous tax regulations. Result: China wins, America loses.

 

You would be surprised by how much sales tax fraud exists. Non profit organizations and businesses that have permits to buy for resale don't pay sales tax, those permits are already miss used on a daily basis. I can see that abuse getting worse than the system we have in place

 

If the IRS spent less time deciphering the goofy tax code, they'd have more time and resources to crack down on the sales tax fraud.

 

I realize there is a lot of sales tax fraud (I have family who were business owners for many years). There is no way to completely stop people from gaming the system. It is just something that we have to deal with. I think it will be a lot easier to detect and control fraud with a sales tax than with the system we currently have, where even CPA's don't agree how much tax is owed on complex tax situations.

 

Do a little searching for Steve Forbes proposal for a 17% Flat Tax. It made lots of sense then. It still makes lots of sense now - to me. It will never fly though because it's too hard to take advantage of. Bummer.

 

This is the basis of the Cain 9-9-9 plan, with less tax law work to adjust for lower incomes. ( that is where Forbes plan was starting to look like the existing tax law ). Cain's 9-9-9 plan, 15-APR is just another day on the calender as individuals do not file any paper work. The mortgage & interest deductions are gone, as is capitol gains and interest / dividend inclusions, as well as estate tax at the federal level.

The Forbes flat tax has some personal deduction amount, a minimum income level to be met, and if I recall correctly Social Security had the cap removed on it ( pay 12.4% on all of it, and no mention if the monthly amount for those that pay over the current cap got anymore ).

An individual will only pay a max of 9% to the federal govt for what they make on a W2 under this plan ( seems to be the supposition train, where this is in addition to some other percentage ).

The note of empowerment areas ( reductions of the 9% max - only way to pay less ) are for lower income areas, and it is not clear to me if the credit is to the business or to the individual and if it is a geographical boundary or if income was also part of this.

The part that is unclear, is how much the delta is ( which ever way ) for corporate taxing. The tax credits ( or as the left calls it, subsidies ) are gone, but the basis amount to calculate taxes is much different. This means dividends the company nor the individual are paying taxes on it. Money brought back in from overseas is also not part of the equation ( stop forcing companies to leave capitol overseas ).

The one that seems to get people is the 9% federal sales tax.
Guess what, if a person saves money, this means they get off free ( the plan is actually designed to encourage saving, not consumption ).

Add up what you spend in a year, and add it to the 9% federal tax on the W2 amount, bet a lot of middle class people come out better off. Those in their 20s that live with mom and dad, and buy expensive cars, and spend every bit of their income, they are going to get hit hard. Good lesson, stop spending money like an idiot and save.

Those that pay the big amounts, the Warren Buffetts of the country that consume. He pays the same 9% on his W2 ( but his dividends / interest and capitol gains are free ), but what he buys ( which is a lot more than 99% of the country ) he is going to pay that additional 9%.
His jet is going to cost him an additional 9% ( or the leasing company who is going to pass that cost on to Warren ).
Take that Warren, complain about not paying your fair share again, with the hand in hand photo ops with Obama.

 

Thanks for your usual great clarification Steve! Yea, I guess I could like the 9-9-9 plan then. But, for the same reasosn Steve's plan never got any traction, I doubt this one will either. Too many home owners get scared because they'd loose their mortgage (or other) deductions. Never mind the fact that the overall tax bite would be less. Remember, simple never works for politicians. Too hard to hand out (and hide) favors.

 

It is a good idea, the amount of taxes you pay is based upon how much you consume. If you save your paycheck, your taxes will be less regardless of what the sales tax is ( capitol gains, interest and dividends are exempt from any income tax ).
The unknown, I have yet to see any data on what this does to the ETR of the lower end.
The CBO places the lowest 5th of tax payers as a ETR of 4%, but this is for those with an income avg of ~ 20K from what I recall.

The 2nd to 5th, the MTR is lower under this plan on the equivalent 15-APR type tax, but the consumption part could bring it back up to on par. the 2nd 5th is 12% I think.

The devil is in the details, does this national sales tax include home sales ?
This could also have an impact on rental, as new units being built ( and sold to a mgmt or landlord ) could have 9% added to them over the note. Could drive up housing costs.

It should help the job area, as when the refrigerator starts to have problems, one might be more apt to fix it, vs just replacing it. This could hit the bottom line at Home Depot, Lowes, and the appliance manufactures.

Without the details on what is included in the national sales tax, and a few examples on the XOM / Walmart for the business taxes, this makes it all pie in the sky at the moment.

good idea, but those can also have poor implementation.

Canada has a 16% corporate tax rate.
I have not gone and calculated XOM's ETR I think it was 40% of profits in 2010 ( 2009 ? ).
But what is 9% of Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders for XOM equal for a ETR for profits ?

I do not know if Cain has this level of detail, and he is holding back on it, maybe to stop the serious attacks on the plan ( leave it as supposition attacks that really are opinion based ) or if he would wait until after elected to put the plan to the Ways & Means committee ?

The supposition train on the plan has already started, saying it is some where in the area of $400 B ( $200 B ? ) short of what is collected today ( collected not spent ).

I am sure there are quite a few economic professors drilling this plan for Obamas staff, but we know how well that works. I could take a SWAG that the target is to prove this is a tax cut on the top 40% income for tax payers, so the DNC can go back to pushing the tax cuts for the rich ploy.
The last economic professor in the Chief Economist position had shell shock when his teachings did not work in the real world, so Obama is trying a different university to see if Princeton is any better than University of Chicago.

 

If you think any of the tax code will be replaced you all are sadly mistaken. The problem with the tax code is they will not and never have to my knowledge removed anything from it they've only added to it. Guess what will be added to it? This 9% plus what we already pay. I guarantee it

 

You do know that this is a Republican candidate we are talking about.

If Cain were elected POTUS, and tried to get the Ways and Means committee to add 9% to the federal tax rates, the fight now with Obama would start up again, and that would make Cain a 1 term wonder.
Don't think the RNC would even support him for reelection.

What are the terms of this guarantee you are offering, as I would to know in advance where to submit a claim to.