9-9-9 :: I'll play

[xBiffx]

So it has more to do with what the company can get away with charging and less to do with passing on taxes. An example: A company makes a widget that no one buys. How much tax are they assessed under the current system? Under Cain's 9-9-9 plan?

Zero under both. If you aren't making money (i.e not selling products), you aren't paying taxes on it.

Also, a business is not obligated to pass on savings when they get a tax break/savings. The object of a business is to make money, why would they do anything voluntarily to stop/slow that. Don't try to tell me that you wouldn't do the same personally.

 

[her209]

Zero under both. If you aren't making money (i.e not selling products), you aren't paying taxes on it.

Also, a business is not obligated to pass on savings when they get a tax break/savings. The object of a business is to make money, why would they do anything voluntarily to stop/slow that. Don't try to tell me that you wouldn't do the same personally.

As I understand it, businesses would pay 9% tax on purchases as well.

 

[Gamingphreek]

yep, another 9%, easy to see who gets screwed here.

You say another 9% like there are a ton before that...

Additionally you are working under the false assumption that businesses don't pay any taxes right now for hiring employees.

Again, maybe I am wrong since I do not own a business but isn't the following true:
-The business must pay the 6.2% of the first $7000 for Social Security
-The business must pay 6% of each employees wages for Federal Unemployment tax.
-The business must pay 1.45% of the employees medicare tax.

Perhaps I spoke incorrectly or missed something, but it seems that, for each employee, an employer pays 13.65% of their salary in taxes. Since Cain has promised to get rid of Social Security and Medicare (Whether or not he can is another story, we are simply talking about his tax plan under the assumption he can come through) the employer is paying 7.65% of tax per employee.

So businesses will see a 1.35% tax increase, not a 9% tax increase. That being said, I thought liberals were all about taxing "big business" and "the wealthy" more because it doesn't filter back to the consumer. Which way is it? I think this is a good middle based on both sets of beliefs personally....

-GP

 

[Gamingphreek]

As I understand it, businesses would pay 9% tax on purchases as well.

I've been searching and I honestly can't find whether or not that is true yet. I feel like you are correct though.

In the example you gave (Regarding the widget that didn't sell); however, I don't think the business pays any taxes on it outside of the taxes for the employees to work there.

-GP

 

[KlokWyze]

Common sense says it would hit the poorest the hardest. Adopting the plan while still taking out Medicaid, SS, etc. makes it sound twice as bad. The fact that it's coming from Cain makes it look thrice as bad.

 

[Gamingphreek]

Common sense says it would hit the poorest the hardest. Adopting the plan while still taking out Medicaid, SS, etc. makes it sound twice as bad. The fact that it's coming from Cain makes it look thrice as bad.

You have provided no quantitative evidence to support that stance. Care to elaborate with some actual facts?

-GP

 

[Ausm]

Still less than what business pays now so I doubt you would see an increase in prices at all due to this plan. But then greedy businesses wouldn't be passing on the savings to the consumer so we still somehow get screwed.

I thought this couldn't be possible in your world?

 

[soundforbjt]

Not really a fair question... How in the world am I supposed to add up all of my purchases over the course of a year? I try to save as much as I can while paying down my Auto Loan. I don't spend outside of my means.


-GP

Well, if you add "I put 6% of my gross income into a 401K" and whatever else you save up and deduct it from your net, you'll get a good idea of how much the 9% sales tax will cost you. Don't forget to add rent, unless you own your house outright.

 

[Ausm]

Why didn't prices go down when the FAA partially shutdown, i.e., no FAA tax was being collected?

The only thing that would go down would be planes

 

[Gamingphreek]

I thought this couldn't be possible in your world?

Stepping outside of the mud flinging by Liberals and Conservatives, I think both should be able to respect the other's argument here.

Businesses want to make money, but they also know that they need to spend money to hire more people to make money.

You really can't be on either extrema because if you are, you aren't respecting a valid/logical argument from the other side.

-GP

 

[Gamingphreek]

Well, if you add "I put 6% of my gross income into a 401K" and whatever else you save up and deduct it from your net, you'll get a good idea of how much the 9% sales tax will cost you. Don't forget to add rent, unless you own your house outright.

Honestly, I don't have those figures readily available and though I love this discussion, I really don't have the time to do that amount of calculations.

With that in mind, my point still stands. If you spend <100% of your net income, you are not paying an additional 9% based on your net income, it is based on whatever amount you choose to spend.

It encourages saving and fiscal responsibility (read: "Do I really need this shiny new [item]"). The fix for this economy from anyone is not going to happen overnight. Since this plan promotes fiscal responsibility for individuals, it is simply a step in the right direction from what I can see.

 

[xBiffx]

As I understand it, businesses would pay 9% tax on purchases as well.

Purchases from companies outside the US only.

 

[Ausm]

Stepping outside of the mud flinging by Liberals and Conservatives, I think both should be able to respect the other's argument here.

Businesses want to make money, but they also know that they need to spend money to hire more people to make money.

You really can't be on either extrema because if you are, you aren't respecting a valid/logical argument from the other side.

-GP

Just was commenting on his post that was like a 180 degree difference betweens his normal posts...sorry i couldn't help myself :wub:

 

[xBiffx]

Just was commenting on his post that was like a 180 degree difference betweens his normal posts...sorry i couldn't help myself :wub:

I was stepping into liberal shoes for a second. They didn't fit.

Also, I don't use greedy condescendingly.

 

[Gamingphreek]

Just was commenting on his post that was like a 180 degree difference betweens his normal posts...sorry i couldn't help myself :wub:

Nah no worries, I know what you guys are saying. I was more speaking towards a broad generality that I felt goes overlooked

 

[shira]

Not really a fair question... How in the world am I supposed to add up all of my purchases over the course of a year? I try to save as much as I can while paying down my Auto Loan. I don't spend outside of my means.

At any rate, if I'm saving 15.36&#37; of my income a year, it doesn't matter because, if I should spend 100% of my income, the upper extrema is 9%. So I still come out on top by 6.36%.

I think it is also important to note that only new items will be taxed at 9%. Used items will not be taxed at all. So the people who are less fortunate can avoid a good portion of the 9% sales tax.

-GP

Your claimed 15% savings under Cain are utter nonsense. You're completely ignoring the effects of deductions and the Cain sales tax.

You said you're giving 10% to charity. That means you itemize. If you own a house and pay a mortgage, that and your property taxes are deductible, too. Assume a typical $300,000 mortgage on a $400,000 house in Loudoun country. That's a $12,750 deduction. And Loudoun's property tax rate is 1.285% = $5140. So you'd be deducting an additional 17,940 from your income. The $1000 or so you pay toward your health care premiums comes right off the top. And of course there's you 6% pre-tax 401IK (and if you really "save all you can," why on earth don't you put more in?).

We also have to deduct your state income tax. Based on the above figures (and a $80,000 starting point), your Virginia taxable income is $48260, for a VA income tax of $2,517.

Add it all up, and your taxable income goes down to $45,743 (assuming an $80,000 starting point). And lest we forget, you reduce that by an additional $3700 as your personal exemption amount. So your taxable income is $42,043, for a federal income tax of $6,688, or 8.36%% of your full wage.

I've completely ignored flexible spending accounts and child-care accounts, which come right off the top of your income. But you're young and healthy and have no kids. But just wait a few years.

So, your total federal tax bill under current rules would be be 8.36 + 7.65 = 16.01%. Hmmmm.

And under Cain? Well, you're at 9% of 72,000 right off the bat, that's 8.1% of the original. And after paying your state taxes and charity and 401K, you're left with 64,683 of income to spend, every penny of which is taxed at 9%. Only you know how much of that you save, but let's assume 15%, leaving $54,980 (but if you do save this much, again I ask why on earth wouldn't you more generously fund your 401k?). You'll pay 9% of that (= $4948) when you spend it, or 6.19%. So the grand total for you is 16.01% versus 14.29%. A 1.90%% benefit, or $1520. But if your economic situation shifts ever so slightly - if you add one dependent (with a corresponding increase in your health care premium) or have $5000 more in deductons, that entire difference will disappear.

And if your life situation shifts a little more, you'll be in the hole. Being in the upper half of the middle class, you might be able to do a little better under Cain, but you could easily do a lot worse. And if you're poor or in the bottom half of the middle class, you'll certainly do worse.

But if you're wealthy, you cannot possibly fail to save a huge amount under Cain. If you're taking in $1 million a year and spending a half million, you were paying out 20 to 35% under the current rules and would be paying 12.5% under Cain.

Nothing about your personal example refutes the assertion the the 9-9-9 plan is highly regressive. A massive shift of taxes from the wealthier to the less wealthy.

 

[Atomic Playboy]

If you make between 75k and 100k anually, you're solidly in the middle class, but you're earning nearly double the individual median income, so we'll say upper middle class. Poverty level for an individual is around 12k.

Right off the bat, let's assume the person living at poverty level isn't paying taxes; they're probably getting refunds on pretty much all withholdings at a Federal level, and probably at the state level as well. So that gives them $1,000 a month in spending money.

Rent: $300. This is very, very low, but we'll assume that this person lives with roommates.
Food: $100. This is assuming that the person is taking advantage of food stamps, which will generally cover a significant portion of food for a given month.
Utilities: $150. This will primarily be electric, water, waste removal and heat (if separate); no cable TV, cheapest internet available, cheapest cell phone plan available.
Car: $100. This includes both the cost of car payments, assuming a cheap, used car with financing relative to income status (so, pretty terrible), and the cost of maintenance/gas.

That's the required monthly expenses; $650, before anything else is considered. Not too bad; they still have $350 left over for any other spending (which they'll probably want to use, since their life seems pretty Spartan right now). But they don't have medical insurance, so any medical costs will hit them significantly harder than someone who is covered (ie middle-class Americans who get that benefit through their job); that might come out to $500 per year (but we'll just ignore it).

OK, so now let's factor in the 9-9-9. They're no longer bringing home $1,000 a month, they're bringing home $910. Their required monthly expenses have gone from $650 to $708.50. They've gone from having $350 in disposable income a month to just over $200. And keep in mind, this isn't just "fuck around" money, this is money to spend on every other expense that they might have to cover in a given month; car repair, doctor's bills, any unforeseen home expenses. If they want to go out once a week for $25 a night, they've used up half their disposable income. And anything they purchased would be subject to that 9% sales tax, so that $200 disposable income is actually only $182.

So as far as numbers go, their effective tax burden went from 0% to 14.85% (ignoring their disposable income since there's no guarantee they'll spend it). But this is also assuming that they're allowed to stay on food stamps, and Herman Cain has certainly seemed to favor reducing welfare spending across the board. If this person were suddenly taken off food stamps, virtually all of their disposable income would go straight into the food budget and leave them $0 for spending per month on any unforeseen expenditures or entertainment. If they wanted to spend anything else? Borrow it, put it on the credit card, go into debt and never get out because their real wages per month are entirely going to items that are required for basic survival.

So, your tax burden may go down, being in the upper 40% of wage earners. Someone in the bottom 15% of wage earners would see their taxes grow by huge numbers. The math is right there. Can you still not see why people say that this plan unfairly shifts the tax burden from the wealthy to the lower classes? Saying that everyone should pay a little into the system is fine, but why should a "fair share" dictate that a Wal-Mart greeter have absolutely no money apart from what is required for survival while a mortgage broker has enough to afford a second home for vacations?

Incidentally, while researching these numbers, I was shocked to find that over 15% of Americans live on poverty level wages. $12,000 a year is nothing at all, or $22,000 for a family of four... Outrageous.

 

[xBiffx]

Incidentally, while researching these numbers, I was shocked to find that over 15% of Americans live on poverty level wages. $12,000 a year is nothing at all, or $22,000 for a family of four... Outrageous.

Incidentally, you might be shocked to know that poverty in this county is a choice.

So going from a inequitable system in which people are pretty much paid for bad decisions to a system in which everyone has to foot the bill is bad? Why should people who use none of the services that taxes pay for be forced to pay a majority of that bill while others who consume a majority of those services pay next nothing for them?

 

[MomentsofSanity]

Honestly, I don't have those figures readily available and though I love this discussion, I really don't have the time to do that amount of calculations.

With that in mind, my point still stands. If you spend <100% of your net income, you are not paying an additional 9% based on your net income, it is based on whatever amount you choose to spend.

It encourages saving and fiscal responsibility (read: "Do I really need this shiny new [item]"). The fix for this economy from anyone is not going to happen overnight. Since this plan promotes fiscal responsibility for individuals, it is simply a step in the right direction from what I can see.

Out of curiosity what % of income do you believe the working poor pay on "shiny new items" and what % do you think is on rent, utilities, food, clothing, gas etc...? It seems you believe the poor have a huge amount of disposable income. It's simply not the reality.

 

[xBiffx]

Out of curiosity what % of income do you believe the working poor pay on "shiny new items" and what % do you think is on rent, utilities, food, clothing, gas etc...? It seems you believe the poor have a huge amount of disposable income. It's simply not the reality.

Food would not be a taxable item in most national sales tax scenarios. Pretty sure this will be the case in the 9-9-9 plan.

 

[Siddhartha]

A lot of these articles really have me confused. Especially this one:
http://www.latimes.com/news/politics/la-pn-cain-axelrod-20111017,0,7647069.story

Most notably, this quote:


These people in office are highly intelligent - why in the world do they think:
A. That the poor and middle class will spend 100&#37; of their income when calculating 27%
B. The business tax somehow applies to everyone...

--------------------------

In response, I'll play the game here. Under the current system:
-I'm single
-I have a Bachelors degree
-I live in Loudoun County Virginia
-I donate 10% of my gross income to charitable organizations
-I put 6% of my gross income into a 401K
-My work pays for part of medical, dental, and vision insurance
-I only claim myself as a deduction
-My only debt is my car payment which I have positive equity on.
-I make between 75K-100K annually

As of right now:
Federal Withholding consumes 15.80% of my Gross Income equaling 17.08% of Federal Taxable Gross Income.
Federal MED/EE consumes 1.43% of my Gross Income equaling 1.54% of my Federal Taxable Gross Income.
Federal OASDI/EE consumes 4.13% of my Gross Income equaling 4.47% of my Federal Taxable Gross Income.

As of right now:
VA Withholding consumes 4.66% of my Gross Income equaling 5.03% of my Federal Taxable Gross Income.

In total, the Federal Government consumes 21.36% of my gross income. That equates to 23.08% of my Federal Taxable Gross Income.

Under what we know about the 9-9-9 plan:
I'll pay 9% income tax on my Gross Income less 10% due to charitable donations.

Every time I make a purchase, that purchase will be 9% of that items value.

I do not own a business, thus the last '9' does not apply to me.

In short, I'll go from paying 21.36% of my gross income to the Federal Government, to paying 9%.... A difference of 12.36% in my favor-- A middle class working american citizen.

Questions?

-GP

The question I always ask when someone proposes a "new" tax system is Who is going to pay less taxes and who is going to pay more?

 

[her209]

Purchases from companies outside the US only.

How exactly do we levy a tax on a purchase that happens outside the US?

 

[xBiffx]

How exactly do we levy a tax on a purchase that happens outside the US?

Same way we levy any tax on imported goods. As good clear customs, they are assessed? If the purchase is made outside us and the goods stay there, who cares?

 

[ElFenix]

FTFY. Party affiliation does not even play into that argument.

umm, no. who bears what portion of the tax is based on the angles of the supply and demand curves.

 

[xBiffx]

umm, no. who bears what portion of the tax is based on the angles of the supply and demand curves.

So my statement is correct. Has nothing to due with party affiliation. Or were you trying to say otherwise?