[quote]UtahLama wrote:
[quote]Mufasa wrote:
If I was Cain; I would get on TV and “Jerry McGuire” all these “supporters”:
“…SHOW ME THE MONEYYYYYY…!!!”
Mufasa
[/quote]
If he gets the GOP nom…it will come, in droves.
[/quote]
ULama:
The problem is that Cain has to get to that point…and that takes MOOOLA!
About “9/9/9”…it really does seem to have a lot of merit.
Mufasa
Cain is change I can believe in.
I don’t like Cain’s 999 plan. It’s impractical and reckless. But even if Cain does somehow get elected, his plan won’t go anywhere.
Impractical and reckless in what way(s), Skaz?
Mufasa
[quote]Mufasa wrote:
Impractical and reckless in what way(s), Skaz?
Mufasa[/quote]
Again, primarily it would suck away Congressmen’s ability to get bribes, whores, and favors in return for specialized tax treatment.
Moreover, the elite class have made elaborate tax shelters and scams (primarily fake charatable organizations, fake charatable land holdings, etc) so they can live the high life without having taxable income. They would be PISSED to have to pay sales and income tax, and would fight this tooth and nail.
Remember, John Rockerfeller, then the richest man in America, was for the progessive income tax to “keep Jews and doctors out of my [his] country club.”
[quote]Jewbacca wrote:
[quote]Mufasa wrote:
Impractical and reckless in what way(s), Skaz?
Mufasa[/quote]
Again, primarily it would suck away Congressmen’s ability to get bribes, whores, and favors in return for specialized tax treatment.
Moreover, the elite class have made elaborate tax shelters and scams (primarily fake charatable organizations, fake charatable land holdings, etc) so they can live the high life without having taxable income. They would be PISSED to have to pay sales and income tax, and would fight this tooth and nail.
Remember, John Rockerfeller, then the richest man in America, was for the progessive income tax to “keep Jews and doctors out of my [his] country club.”[/quote]
That’s about right on Rockefeller. In fact, the often quoted %90+ percent income tax on millionairess was actually less than they pay in income taxes today because of the many many exceptions that were given back then.
I believe the oft maligned point of this plan, by the media is that a sales tax would be regressive (especially so when considering the flat tax rate). I believe their argument by nature is to keep the same plan in place that basically turns the tax system into picking winners and losers, solidfying the class warfare that lubricates campaigns.
The argument for sales tax as regressionary stems from the Marginal Propensity to Consume being higher for the lower classes than the upper. So i feel a few questions are in order.
would this national sales tax be in addition to state sales tax? If so that could mark up the price of an item by 9+5 or more percentage points total. Is the lower effective corporate tax rate going to stimulate the economy enough to offset the burden to the consumer? IE will jobs and revenue be bolstered by this. My thought is they will.
the MPC for less affluent people is generally related to food and clothing expenditures…and I am wondering if these would be exempt, as many state sales tax have them. If we take those items out of the equation, then the marginal propensity to consumer for items other than those is much higher for the affluent, and they would be paying “their fair share” of consumption. IE buying a few mercedes will obviously put less of a dent in the pockets of those who can afford such, and yield higher tax revenue than say a 60k family of four buying a tv and a corrolla.
I am less familiar with the elimation or protection of certain deductions, but it would be easily assumed that the simplification of the tax code would bring in more revenues and give less incentive for the wealthy to hide their income via deductions, non profit shells etc.
I also think it would be a very easy barometer to check federal spending, which is our main problem. If you can expect a certain amount of revenue based on simple percentages, one would assume that federal spending would have to shrink in turn, less be subject to more zealous bond issuing.
Though there are several facets of Cains philosophy I disagree with, perhaps one of the more beneficial parts of this is the simplicity to which it can appeal to the voting populace while delivering economic growth.
[quote]Mufasa wrote:
Impractical and reckless in what way(s), Skaz?
Mufasa[/quote]
Like stated already, it’s a regressive tax in which the working class pay more than wealthier Americans. It’s a huge tax cut for the wealthy, and an even bigger one for those “1%”.
It’s irresponsible in the fact that there’s not much detail in the plan as it stands. People like the “simplicity” of what Cain’s plan represents, but there’s not much detail in the plan.
Rather than type out a wall of text, here’s a link to download a very well-written criticism of Cain’s fairy tale tax plan. It’s a fantastic read and I encourage everyone to check it out. It’s a PDF file, click on the One-Click Download:
Here’s another article that I thought was good:
http://economix.blogs.nytimes.com/2011/10/11/inside-the-cain-tax-plan/
But even if Cain does somehow win the presidency, his plan will be dead in the water before he can even present it to Congress.
[quote]skaz05 wrote:
Rather than type out a wall of text, here’s a link to download a very well-written criticism of Cain’s fairy tale tax plan. It’s a fantastic read and I encourage everyone to check it out. It’s a PDF file, click on the One-Click Download:
[/quote]
I question Kleinbard’s motives in that piece. Cain has been clear that the business tax is on profits. Kleinbard takes a gross misinterpretation of the term gross income to suggest that the business tax will include a tax on wages. Gross income is all revenue less Costs of goods sold, and wages are included in costs of goods. This simple fact throws the Kleinbard paper completely out the door. He also assumes that the poor spend every dime they make, and that everything they spend will be taxed. While Cain hasn’t given the specific details of what will and will not be subject to the sales tax, he has repeatedly said all new goods. Based on that I think it would be safe to assume that at the very least mortgages and rent money will not be taxed, which is the biggest portion of most everybody’s monthly expenditures.
He also goes on to talk about the hidden tax in which current savings will later be taxed through consumption, he is correct but this contradicts the point he is trying to make in that the 999 plan is regressive. People with little savings will not be affected much by this, whereas the wealthy with large savings will be. I will admit this is one thing I do not like about the plan. I have been contributing to a Roth IRA instead of a traditional. Under this plan, I would never see the benefits of the Roth.
Has anybody figured out how the 9-9-9 plan will impact you? Based on my 2010 earnings and spending, I came up with approximately a 25% tax cut for myself.
The most any individual or family could possibly pay is 9% income tax plus a 9% tax on their remaining 91% of income for a total of 17.19%. This of course assumes that they spend every dime they make on new goods and pay the sales tax. I know I save a much higher percentage of my income than the average person as I only spend roughly 25% of my gross on a family of three, but even if you say the average person spends 50% on taxable new goods, their total tax bill would be just 13.5%, including FICA taxes.
Now this is another area where I disagree, Cain keeps saying that individuals are already paying 15.3% FICA tax, so they are basically getting an instant cut. Individuals pay 7.65% and the employer pays the other 7.65%. I don’t think it is a fair assumption for Cain to suggest that the employers portion will all get kicked back to the employees, so there is a slight discrepancy there, although Kleinbard does also make the accusation that all payroll taxes are fully bourne by employees.
Without a doubt those that pay little or no income taxes right now will see a tax raise, but not near as much as some are wanting you to believe. This is going to be a tough sell on those people, but the bottom line is that 47% of people can’t continue to get a free ride.
[quote]pushharder wrote:
As an employer myself I would have to say I would effectively give the 7.65% (my portion) back to the employee…and more. Why? Because in a booming or even just a healthy economy I have to pay higher wages in order to attract quality labor.
I am presently paying lower wages in my entry level jobs than I was three years ago right before the recession kicked my teeth in. A good 15% or so less.
[/quote]
The question isn’t what you would do in a booming economy, it is whether or not the 7.65% would go straight into the payroll if FICA was eliminated. Furthermore, the question isn’t whether or not you or some owners would do so, as I don’t doubt that many would, but would it result in an immediate 7.65% raise across the board? I don’t think that is a fair assumption to make.
Okay.
There are pluses and minuses with “9/9/9”.
But is there anyone anywhere willing to point out how “great”, or even fair the current tax Code is? (Most likely not…)
Does anyone have an “unbiased” (if that is possible) link that compares the pluses and minuses of “9/9/9” to our current tax code?
Mufasa
[quote]Mufasa wrote:
Okay.
There are pluses and minuses with “9/9/9”.
But is there anyone anywhere willing to point out how “great”, or even fair the current tax Code is? (Most likely not…)
Does anyone have an “unbiased” (if that is possible) link that compares the pluses and minuses of “9/9/9” to our current tax code?
Mufasa[/quote]
Until Cain puts forth more details, I don’t think it is possible for an unbiased comparison. We are left to make many assumptions on what exactly will be taxed. It is also going to vary by the individual. Two people making $100k can pay vastly different rates based on their consumption, making comparisons difficult. I have tried to make all of my assumptions based purely on what Cain has said in the most literal sense, as he has repeatedly said how simple and efficient his plan will be. I doubt we will see the specifics until the primaries are well under way and (if) Cain has secured the nomination.
I think the best thing to do is to decide whether or not it is fair in principle. Don’t let the effects of a transition convince you whether or not it is a good plan, as unfairness (such as the hidden tax on current savings that will later be spent) can just as easily be attributed to the current tax code. I do challenge to figure out how it will affect you personally and report back, as I am interested to see how it will affect others. Based on the assumptions I made, namely not paying tax on my mortgage (PITI all included), I can say that my 25% savings figure is very accurate, as I have detailed records that I figured it from.
Tedro;
Great insights. Thanks!
I’ll have to get some help in working out my own personal specifics; but it seems really worth it if we are going to really evaluate “9/9/9”. However, keep this is mind.
There are most likely stats out there that give estimates of things like average household consumption based on income; average FICA based on income; average overall tax based on income and State…you get the idea.
It seems to me that you would have to insert independent variables like these in order to really compare “9/9/9” with say, the current tax code. It may not be individual (which would be the most accurate)…but it may give a very “fast food” electorate a quick, “sound-bite” look at the comparisons. In many ways, Cain has been trying to do this.
Then we get to the point that JB and Push brought up; with something so radical, would it pass?
I would have to agree with JB, Push , and actually the “Occupy” protesters (sorry JB and Push for grouping you guys!)…we have deep-rooted systemic problems in our electorial and legislative processes, independent of party.
Regrettably, Cain’s plan would most likely never see the light of day. There are FAR too many people who benefit from the tax code remaining as it is.
Mufasa
[quote]tedro wrote:
[quote]skaz05 wrote:
Rather than type out a wall of text, here’s a link to download a very well-written criticism of Cain’s fairy tale tax plan. It’s a fantastic read and I encourage everyone to check it out. It’s a PDF file, click on the One-Click Download:
[/quote]
I question Kleinbard’s motives in that piece. Cain has been clear that the business tax is on profits. Kleinbard takes a gross misinterpretation of the term gross income to suggest that the business tax will include a tax on wages. Gross income is all revenue less Costs of goods sold, and wages are included in costs of goods. This simple fact throws the Kleinbard paper completely out the door. He also assumes that the poor spend every dime they make, and that everything they spend will be taxed. While Cain hasn’t given the specific details of what will and will not be subject to the sales tax, he has repeatedly said all new goods. Based on that I think it would be safe to assume that at the very least mortgages and rent money will not be taxed, which is the biggest portion of most everybody’s monthly expenditures.
He also goes on to talk about the hidden tax in which current savings will later be taxed through consumption, he is correct but this contradicts the point he is trying to make in that the 999 plan is regressive. People with little savings will not be affected much by this, whereas the wealthy with large savings will be. I will admit this is one thing I do not like about the plan. I have been contributing to a Roth IRA instead of a traditional. Under this plan, I would never see the benefits of the Roth.
Has anybody figured out how the 9-9-9 plan will impact you? Based on my 2010 earnings and spending, I came up with approximately a 25% tax cut for myself.
The most any individual or family could possibly pay is 9% income tax plus a 9% tax on their remaining 91% of income for a total of 17.19%. This of course assumes that they spend every dime they make on new goods and pay the sales tax. I know I save a much higher percentage of my income than the average person as I only spend roughly 25% of my gross on a family of three, but even if you say the average person spends 50% on taxable new goods, their total tax bill would be just 13.5%, including FICA taxes.
Now this is another area where I disagree, Cain keeps saying that individuals are already paying 15.3% FICA tax, so they are basically getting an instant cut. Individuals pay 7.65% and the employer pays the other 7.65%. I don’t think it is a fair assumption for Cain to suggest that the employers portion will all get kicked back to the employees, so there is a slight discrepancy there, although Kleinbard does also make the accusation that all payroll taxes are fully bourne by employees.
Without a doubt those that pay little or no income taxes right now will see a tax raise, but not near as much as some are wanting you to believe. This is going to be a tough sell on those people, but the bottom line is that 47% of people can’t continue to get a free ride.
[/quote]
Really good post. Thanks for saving me the time.
Another complaint that I often here is that this would probably do away with the mortgage interest deduction. I will have to say when I first thought of it my sphincter tightened a notch or two. Then when I started doing the math an looking at it from the wider perspective I realized it was much to do about nothing.
[quote]JEATON wrote:
Really good post. Thanks for saving me the time.
Another complaint that I often here is that this would probably do away with the mortgage interest deduction. I will have to say when I first thought of it my sphincter tightened a notch or two. Then when I started doing the math an looking at it from the wider perspective I realized it was much to do about nothing. [/quote]
I am actually in favor of getting rid of the mortgage deduction regardless. I would view it as getting one step closer to my ideal of a flat income tax without the sales tax in Cain’s proposal.
I will readily admit that since I got married I don’t even get to itemize so I don’t get the deduction. I bought a modest house when I was single so now we simply don’t pay enough interest to make it worth it. However, I would also be willing to give up our exemptions and child tax credits in the name of a flat tax. I think we would agree that right now the tax code is just so screwed up that nobody is willing to let go of a single deduction/credit because there is no faith that it will even out in the long run with lower general rates.
One question I had has been answered; excise taxes will remain.
I wonder if Cain plans to get rid of these in the final steps of his proposal as the fair tax is phased in.