Herman Cain's '999 plan'

[Ausm]

Dammit Craig, you went and blew the lid off the whole ruse. Now the world knows our secret plan.

Not really he is just nicely putting how idiotic and unfair the 666 plan is which truly a tax plan from HELL 😉

 

[Bird222]

re-read what i wrote. do it until you understand.

And? I know what the total cost of an employee is to a company. What does that have to do with me as an employee getting my taxes reduced from 15% to 9% when I wasn't paying the 15% to be begin with? Now if this plan required that the employer start giving the employees the 7.5% in wages that it doesn't have to pay to the govt then you might have something. Otherwise Cain's statement still doesn't work. And if your point is that businesses would hire more people or pay bigger salaries with the reduced tax burden, I'll believe it when I see it. We are currently playing that game now (and for the past 10 years) and it's not working.

 

[werepossum]

B-b-b-b-ut that's socialism!

Socialism, no, but it is protectionism. Protectionism clearly has its own set of problems, but personally I find them less onerous than free trade which is kicking our collective ass.

 

[Gamingphreek]

I'm having a little trouble understanding these arguments.

(*Note, these numbers do not include donation to charitable organizations)
Right now, I calculated that 21.36% of my income goes to:
1. Federal Withholding
2. Federal MED/EE
3. Federal OASDI/EE

The state of Virginia taxes my income at 4.66% of my income.

Now if Cain is doing away with Medicare/Medicaid, Social Security, and whatever else gets taken out by the Feds and setting it at 9% of my salary, I should be coming out on top.

The state of Virginia and my local government have a 4% and 1% sales tax respectively.

By my calculation 21.36%-9% = 12.36% savings on my net income.

If I choose to spend any of it, I am paying an additional 9% tax (over what I already pay) on that item. If I choose to save as much money as possible, I am saving 12.36% while I sit there and accrue enough money to purchase something that I want.

If I choose to invest it, I then pay 9% on any gains earned (Since that isn't counted as income).

So all these articles saying that people, most notably the poor, will be hit with 27% tax are incorrect. Even if they say that they will be hit with an 18% take is incorrect. The 9% sales tax is based on how much the item is, not your total salary. So if Dan Snyder wants to purchase a $70M Super-Yacht, he can pay 9% for that luxury.

Sounds like it promotes fiscal responsibility to me...

 

[werepossum]

I'm having a little trouble understanding these arguments.

(*Note, these numbers do not include donation to charitable organizations)
Right now, I calculated that 21.36% of my income goes to:
1. Federal Withholding
2. Federal MED/EE
3. Federal OASDI/EE

The state of Virginia taxes my income at 4.66% of my income.

Now if Cain is doing away with Medicare/Medicaid, Social Security, and whatever else gets taken out by the Feds and setting it at 9% of my salary, I should be coming out on top.

The state of Virginia and my local government have a 4% and 1% sales tax respectively.

By my calculation 21.36%-9% = 12.36% savings on my net income.

If I choose to spend any of it, I am paying an additional 9% tax (over what I already pay) on that item. If I choose to save as much money as possible, I am saving 12.36% while I sit there and accrue enough money to purchase something that I want.

If I choose to invest it, I then pay 9% on any gains earned (Since that isn't counted as income).

So all these articles saying that people, most notably the poor, will be hit with 27% tax are incorrect. Even if they say that they will be hit with an 18% take is incorrect. The 9% sales tax is based on how much the item is, not your total salary. So if Dan Snyder wants to purchase a $70M Super-Yacht, he can pay 9% for that luxury.

Sounds like it promotes fiscal responsibility to me...

You must be self-employed to pay that percentage of your income, so it might work out for you. Nonetheless, his plan removes all capital gains taxes, and that revenue will have to be replaced as we're already spending far too much more than we take in to sustain. Thus at least two of those '9's would have to increase considerably to make up the difference. His plan would be a massive shot in the arm for business, granted, so more people would have jobs. But outsourcing would still be just as attractive, and until unemployment approaches 5% businesses would have no incentive to share much of the extra profit with their employees. So unless a lot of your income consists of capital gains, or you have a high salary and are taxed above 18% effective rate (NOT nominal rate), then you'd probably be worse off financially for quite some time, perhaps forever. Outsourcing would still be at least as attractive, and that and illegal immigration would probably continue to exert more downward pressure on wages than the upward pressure exerted by the more profitable business environment.

Cain's plan would be great for those who save a lot of their income, something in general I think we need to promote. But one can certainly make an argument that a recession is not a good time to incent people not to spend money.

 

[Gamingphreek]

You must be self-employed to pay that percentage of your income, so it might work out for you. Nonetheless, his plan removes all capital gains taxes, and that revenue will have to be replaced as we're already spending far too much more than we take in to sustain. Thus at least two of those '9's would have to increase considerably to make up the difference. His plan would be a massive shot in the arm for business, granted, so more people would have jobs. But outsourcing would still be just as attractive, and until unemployment approaches 5% businesses would have no incentive to share much of the extra profit with their employees. So unless a lot of your income consists of capital gains, or you have a high salary and are taxed above 18% effective rate (NOT nominal rate), then you'd probably be worse off financially for quite some time, perhaps forever. Outsourcing would still be at least as attractive, and that and illegal immigration would probably continue to exert more downward pressure on wages than the upward pressure exerted by the more profitable business environment..

Nope, not self employed. I'm Single, 23, and make in the 75K-100K range in Loudoun County, VA (Expensive county 🙁, but nice 🙂)

I'm so sorry - I thought his plan removed capital gains tax. At any rate, it is 9% business tax, thus my previous question is still partially valid. How again are the rich big business owners going to get richer if they are being tax a 9% gross income?

With no capital gains tax that is even better for most people. It promotes saving money and fiscal responsibility even more then as you can invest the money without penalty.

Certainly there are malicious ways around these taxes, but I would imagine that, Cain probably has a response to that that isn't public yet. I highly doubt based on his previous track record that he would just let things fall by the way-side.

As for outsourcing and illegal immigration, I would imagine he has some response separate from the tax plan to deal with the illegals in the country. As far as outsourcing, I think that can only get a company so far - eventually they would reap what they sow as far as cheap labor is concerned (Perhaps consumers are tired of dealing with people they have trouble understanding)

Cain's plan would be great for those who save a lot of their income, something in general I think we need to promote. But one can certainly make an argument that a recession is not a good time to incent people not to spend money.

I can respect that. I can definitely see how it won't promote immediate spending habits, but I don't think there is a quick fix to the situation the economy is in. It will take time - over time I think this will help as people are forced to be more fiscally responsible.

Additionally, I think it puts us on the right track towards weening people off of SS, Medicare, and Medicaid as it puts the power in the people's hands to save for their future. (While I am firmly against National Healthcare and believe it is unconstitutional, I *do* believe that something needs to be done about the current system)

At any rate, I can't speak for everyone else, but I can say that if I am bringing more money home and saving more money, I'm not just going to stock pile it forever. I generally manage my finances in a sort of plateau-like structure.

For instance, I have a car payment that I need to account for and so every time I reach $X in my savings account, I make a lump sum payment in addition to my monthly payment. When that is paid off, perhaps I'll be ready to purchase a home and will need to get to a certain threshold before I spend my money.

9-9-9 in the short term, at the very worst it seems status quo, while long term it only gets more and more attractive.

(Oh and for the arguments against it because we could raise it to 10-10-10 or something. Can't the government already raise our taxes? How can this be listed as a negative given our current situation?)

 

[Jhhnn]

His plan would be a massive shot in the arm for business, granted, so more people would have jobs.

Heh. Business doesn't need a shot in the arm. Corporate profits & cash reserves are already at all time highs, while executive salaries are exploding. Allowing them even more money doesn't mean they'll actually hire anybody, at all, no matter how badly you want to believe in that.

Why would they, in the face of weak demand? To create inventory they can't sell?

You're right that Cain's plan would very much benefit those on the lender side of the lender/debtor scenario, and that's not what we need. That's the problem in a nutshell, to be honest- the enormous debt overhang of the Ownership Society, the nearly inescapable debt of negative equity, and the growing problem of student loan debt.

In aggregate, middle and working class families need more income to meet those obligations, and for that, they need jobs, at least within our shared conceptualizations. Or that debt needs to be destroyed, written off, forgiven before honest growth can occur. Fat chance of that, huh? It'd mean taking money out of the pockets of the financial elite, the lenders, and we've gone to extraordinary lengths to prevent that, and will obviously continue to do so.

Perhaps one of the most amazing aspects of the current situation is the number of recent grads who can't find work. They did all the right stuff, believed in what they were taught, took on a lot of debt to show up at the door of corporate america, wearing their shackles, ready to be chained to an oar...

The answer? "No oar for you! Get off my dock!"

 

[Gamingphreek]

Perhaps one of the most amazing aspects of the current situation is the number of recent grads who can't find work. They did all the right stuff, believed in what they were taught, took on a lot of debt to show up at the door of corporate america, wearing their shackles, ready to be chained to an oar...

The answer? "No oar for you! Get off my dock!"

While that definitely does happen, there are more jobs out there than the media tends to lead you to believe.

Additionally, you need to consider what these students are majoring in. I majored in Computer Science - it is my passion regardless of how much it made (Though it is convenient that the IT industry pays well). Someone coming out with a major in History, or English, or Equine Management IS going to have trouble finding jobs. Additionally, those jobs aren't going to pay as well which honestly begs the question.... Are you in your job for the sole purpose to make money, or do you actually like what you do? Money buys a lot of things, but not happiness...

Heh. Business doesn't need a shot in the arm. Corporate profits & cash reserves are already at all time highs, while executive salaries are exploding. Allowing them even more money doesn't mean they'll actually hire anybody, at all, no matter how badly you want to believe in that.

You can look at it that way, but people are greedy by nature it seems. There is no incentive to just horde money if you are among the fiscal elite. You either want to make more money or lavish yourself with possessions by spending more (I personally hope that, if I were in such a scenario, I would give heavily to the Church and other charitable organizations (moreso than I do now)).

I think people are also glossing over the fact that this should reduce tax evasion/manipulation by corporations. While there are certainly loopholes that we haven't heard a response to yet, there are FAR less than the current system. Thus, all the businesses that are getting out of large portions of taxes and "working the system" will be contributing their fair share, and not a fraction of it. So while it may help businesses, I think there would be a huge boost in Government revenue simply by everyone honest payments of the tax.

 

[OutHouse]

Not really he is just nicely putting how idiotic and unfair the 666 plan is which truly a tax plan from HELL 😉

yea sorta like how idiotic and unfair our current tax system is?

our current tax system is so fucked up im open for radical change to it. stop the loopholes, tax credits and just pay our tax period.

 

[werepossum]

Nope, not self employed. I'm Single, 23, and make in the 75K-100K range in Loudoun County, VA (Expensive county 🙁, but nice 🙂)

I'm so sorry - I thought his plan removed capital gains tax. At any rate, it is 9% business tax, thus my previous question is still partially valid. How again are the rich big business owners going to get richer if they are being tax a 9% gross income?

With no capital gains tax that is even better for most people. It promotes saving money and fiscal responsibility even more then as you can invest the money without penalty.

Certainly there are malicious ways around these taxes, but I would imagine that, Cain probably has a response to that that isn't public yet. I highly doubt based on his previous track record that he would just let things fall by the way-side.

As for outsourcing and illegal immigration, I would imagine he has some response separate from the tax plan to deal with the illegals in the country. As far as outsourcing, I think that can only get a company so far - eventually they would reap what they sow as far as cheap labor is concerned (Perhaps consumers are tired of dealing with people they have trouble understanding)



I can respect that. I can definitely see how it won't promote immediate spending habits, but I don't think there is a quick fix to the situation the economy is in. It will take time - over time I think this will help as people are forced to be more fiscally responsible.

Additionally, I think it puts us on the right track towards weening people off of SS, Medicare, and Medicaid as it puts the power in the people's hands to save for their future. (While I am firmly against National Healthcare and believe it is unconstitutional, I *do* believe that something needs to be done about the current system)

At any rate, I can't speak for everyone else, but I can say that if I am bringing more money home and saving more money, I'm not just going to stock pile it forever. I generally manage my finances in a sort of plateau-like structure.

For instance, I have a car payment that I need to account for and so every time I reach $X in my savings account, I make a lump sum payment in addition to my monthly payment. When that is paid off, perhaps I'll be ready to purchase a home and will need to get to a certain threshold before I spend my money.

9-9-9 in the short term, at the very worst it seems status quo, while long term it only gets more and more attractive.

(Oh and for the arguments against it because we could raise it to 10-10-10 or something. Can't the government already raise our taxes? How can this be listed as a negative given our current situation?)

You seem pretty sharp financially in your decisions, congrats. I missed that you included your income tax withholding, so you are correct; you would save money looking just at two of the three '9's. Whether you come out ahead in total would depend on how many things you buy that are marked up by that 9% business tax. In some cases that will add up; Mr. Supplier #1 with no previous taxable income pays an additional 9% on the material he sells to Mr. Supplier #2, who likewise has no previous taxable income and thus pays an additional 9% on the material he sells to Middleman #1, who likewise has no previous taxable income and thus pays an additional 9% on the material he sells to Retailer #1, who likewise has no previous taxable income and thus pays an additional 9% on the material he sells to the public. In that case the net effect of the corporate tax is quite high. This would be a case like General Electric, the company paying no corporate income tax now due to exemptions. On the other hand, a company paying a net 18% rate right now would see its costs cut and could conceivably cut its prices to increase market share without lowering return on investment. Anything you save is tax free after that, assuming you invest it, so if you have capital gains your overall rate probably would go down. But it's really difficult to say whether your overall tax burden would go up or down because there are so many variables.

9-9-9 would bring in less money as far as I can see, so while government can and will always raise tax rates if allowed, government would HAVE to raise rates with 9-9-9. We simply cannot afford to lose tax revenue, and any significant cuts in government spending, no matter how advantageous in the long term, are going to cost jobs and kill us in the short term. It also gives us two consumer taxes so that government can raise them in a tick-tock fashion. I'd certainly support going strictly to a national sales tax or just removing the corporate tax completely, which would have the result of removing a lot of the cost penalty that US firms have now and would thus make American companies more competitive against imports, but it seems to me that 9-9-9 benefits companies that outsource at least as much as those who produce domestically.

With regards to zeroing out capital gains rates, that does potentially have some benefit for everyone, but it's weighted heavily to the top end of the scale. Someone earning $20K per year could save and invest, but it's likely that his profit would be dwarfed by that of those earning a lot of money who could afford to save and invest much more. It's true that a rising tide lifts all boats, but the climb from your little boat to Warren Buffett's big boat is likely to remain just as high, if not even get higher.

Lastly, I certainly agree there are no easier answers and that part of healing our society involves making people, corporations and government more responsible. I'm just very cautious about making major changes right now, as in this economic environment it's much more easy to justify laying off employees to meet new taxes or costs than to add employees because you have lower taxes or costs. To hire new people or invest in new capital ventures businesses need not only to have the money, but they also need an analysis showing a probable return on investment. Overall I like some things in this plan, more in principle than in details, but I can't support it.

EDIT: And the thing about poor people is that the working poor heads of households currently get not only a portion of their payroll taxes returned, but often get welfare payments using someone else's money. These households would go from paying little or no taxes, or even getting a check, to paying 9%, then paying another 9% on everything they buy. For many of them there would literally be no point in working.

 

[Ausm]

yea sorta like how idiotic and unfair our current tax system is?

our current tax system is so fucked up im open for radical change to it. stop the loopholes, tax credits and just pay our tax period.

Oh I realize our current tax system is a disaster but the 999 plan would be 10 times worse.

 

[Jhhnn]

There is no incentive to just horde money if you are among the fiscal elite.

If there were no incentive, it wouldn't be happening, but it is. In terms of lifestyle, those at the top realized satiation some while ago, yet still pursue profit as if they hadn't.

It's not about that at this point. It's about power, the ability to inflict one's will on others in the political and economic arena, and it's what radical Right funders crave above all else. They see plutocracy as the natural order of things, and egalitarian democracy as an an aberration, even an abomination. For their purposes, an uppity middle class isn't necessary, it's just dangerous.

 

[Doppel]

Romney was challenged by Cain whether he knows all the points of his plan and he saliently responded something like this is a complex issue and cannot be simplified down to such a degree, which is of course right.

The idea is absurd and would push the tax burden even further on the middle and lower classes. Whether it's fair or not (could be debated ad nauseum) it's definitely nothing the lower and middle classes would stomach.

Progressive tax is absolutely necessary to maintain a society at all resembling ours. And everyone knows this, but are willing just for the same of argument on the internet to pretend otherwise.

Still barely matters, Cain will never be president and if he were even his own party would make him walk the plank.

 

[Jhhnn]

The idea is absurd and would push the tax burden even further on the middle and lower classes.

That's been the whole point of every Repub tax plan over the last 30 years, other than GHWB raising taxes, for which he was fed to the sharks.

 

[Bird222]

Nope, not self employed. I'm Single, 23, and make in the 75K-100K range in Loudoun County, VA (Expensive county 🙁, but nice 🙂)

I'm so sorry - I thought his plan removed capital gains tax. At any rate, it is 9% business tax, thus my previous question is still partially valid. How again are the rich big business owners going to get richer if they are being tax a 9% gross income?

With no capital gains tax that is even better for most people. It promotes saving money and fiscal responsibility even more then as you can invest the money without penalty.

Certainly there are malicious ways around these taxes, but I would imagine that, Cain probably has a response to that that isn't public yet. I highly doubt based on his previous track record that he would just let things fall by the way-side.

As for outsourcing and illegal immigration, I would imagine he has some response separate from the tax plan to deal with the illegals in the country. As far as outsourcing, I think that can only get a company so far - eventually they would reap what they sow as far as cheap labor is concerned (Perhaps consumers are tired of dealing with people they have trouble understanding)



I can respect that. I can definitely see how it won't promote immediate spending habits, but I don't think there is a quick fix to the situation the economy is in. It will take time - over time I think this will help as people are forced to be more fiscally responsible.

Additionally, I think it puts us on the right track towards weening people off of SS, Medicare, and Medicaid as it puts the power in the people's hands to save for their future. (While I am firmly against National Healthcare and believe it is unconstitutional, I *do* believe that something needs to be done about the current system)

At any rate, I can't speak for everyone else, but I can say that if I am bringing more money home and saving more money, I'm not just going to stock pile it forever. I generally manage my finances in a sort of plateau-like structure.

For instance, I have a car payment that I need to account for and so every time I reach $X in my savings account, I make a lump sum payment in addition to my monthly payment. When that is paid off, perhaps I'll be ready to purchase a home and will need to get to a certain threshold before I spend my money.

9-9-9 in the short term, at the very worst it seems status quo, while long term it only gets more and more attractive.

(Oh and for the arguments against it because we could raise it to 10-10-10 or something. Can't the government already raise our taxes? How can this be listed as a negative given our current situation?)

A couple of things for you to consider:

1. Your federal income taxes right now can be offset by some deductions. Which would effectively lower your tax rate. From what I understand Cain's plan does away with deductions.

2. You stop getting SS and Medicare taxes taken out so what happens when you retire? Maybe your own private investments will sustain you but if the gov't keeps allowing Wall St. to screw with things (which would probably be the case with Cain in office) you might lose alot of your investments like alot of people have during this recession. You won't have SS to fall back on.

3. Lower income people pay very little in federal income tax now and because they are lower income they don't have extra money that they don't have to spend. So they end up paying 18% in federal taxes (almost 1/5th of their income).

4. Higher income people who at least on paper pay a higher federal tax rate now will get a big tax cut. In addition, since they have alot more income that they don't have to spend on necessities, their effective tax rate on their money from sales tax will be even lower than 9%.

In short, this will hurt middle and lower class workers and greatly help the rich.

 

[Gamingphreek]

A couple of things for you to consider:

1. Your federal income taxes right now can be offset by some deductions. Which would effectively lower your tax rate. From what I understand Cain's plan does away with deductions.

I'm a single 23 year old male with no mortgage. I am able to claim myself, but there isn't anything else I can deduct. I think he still has some deductions (Like donating to non-profit for instance)

2. You stop getting SS and Medicare taxes taken out so what happens when you retire? Maybe your own private investments will sustain you but if the gov't keeps allowing Wall St. to screw with things (which would probably be the case with Cain in office) you might lose alot of your investments like alot of people have during this recession. You won't have SS to fall back on.

It is my responsibility to save enough to sustain me for my desired life style. As convenient as it is to fall back on the government, it isn't the governments place to provide that. If I don't plan accordingly, then it is my own fault and I need to deal with that (Perhaps by un-retiring)

3. Lower income people pay very little in federal income tax now and because they are lower income they don't have extra money that they don't have to spend. So they end up paying 18% in federal taxes (almost 1/5th of their income).

I would imagine there is some provision for people below the poverty line. For me personally, while I don't know economics or the ins and outs of the federal tax system, I would entertain taxing everybody at their gross income less the poverty line (ie: Assuming you make $60K and the poverty line is $20K, you would be taxed on $40K. If you make $1M, you are taxed on $980K)

4. Higher income people who at least on paper pay a higher federal tax rate now will get a big tax cut. In addition, since they have alot more income that they don't have to spend on necessities, their effective tax rate on their money from sales tax will be even lower than 9%.

While they would take home more and have more in pocket, they will also be buying the necessities as well as niceties. I posted it earlier, but Dan Snyder just bought a $70M Yacht. 9% on that would go a long way

In short, this will hurt middle and lower class workers and greatly help the rich.

See bolded part. Apparently I get an error if I don't write something outside of the quote.

 

[Bird222]

It is my responsibility to save enough to sustain me for my desired life style. As convenient as it is to fall back on the government, it isn't the governments place to provide that. If I don't plan accordingly, then it is my own fault and I need to deal with that (Perhaps by un-retiring)

This assumes that the stock market players are playing fair and we have seen that isn't the case. Good luck 'un-retiring' at 70. Ask people over 55 how easy it is to get a new job. Look I am all for saving for retirement. I am doing it myself. It's good to know if shit doesn't work out that you got a little backup. It actually kinda boils down to what kind of society you want to live in. There was a time when SS didn't exist and I don't think the country collectively liked to have the elderly living in poverty.

 

[Anarchist420]

Romney was challenged by Cain whether he knows all the points of his plan and he saliently responded something like this is a complex issue and cannot be simplified down to such a degree, which is of course right.

The idea is absurd and would push the tax burden even further on the middle and lower classes. Whether it's fair or not (could be debated ad nauseum) it's definitely nothing the lower and middle classes would stomach.

Progressive tax is absolutely necessary to maintain a society at all resembling ours. And everyone knows this, but are willing just for the same of argument on the internet to pretend otherwise.

Still barely matters, Cain will never be president and if he were even his own party would make him walk the plank.

Progressive tax actually isn't necessary if the only taxes are low tariffs (5-15%, with the average about 1/8). If double revenue is necessary, then export income can be taxed.

I've never understood why so many people are against exclusively having low tariffs. That's still worse than the state rate tax, but the state rate tax has even less of a chance of happening than tariffs for revenue only.

Cain's plan sucks because it won't reduce federal revenue; I could understand 5-5-5, but 9-9-9 is way too high. I don't see how it couldn't be considering that at least a few corporations are currently paying zero percent tax and the fact that so many people are paying zero percent income tax. To add insult to injury, his plan will tax corporate income, not corporate profits, so corporations will have higher taxes than they do now under his plan.

 

[Gamingphreek]

You seem pretty sharp financially in your decisions, congrats. I missed that you included your income tax withholding, so you are correct; you would save money looking just at two of the three '9's. Whether you come out ahead in total would depend on how many things you buy that are marked up by that 9% business tax. In some cases that will add up; Mr. Supplier #1 with no previous taxable income pays an additional 9% on the material he sells to Mr. Supplier #2, who likewise has no previous taxable income and thus pays an additional 9% on the material he sells to Middleman #1, who likewise has no previous taxable income and thus pays an additional 9% on the material he sells to Retailer #1, who likewise has no previous taxable income and thus pays an additional 9% on the material he sells to the public. In that case the net effect of the corporate tax is quite high. This would be a case like General Electric, the company paying no corporate income tax now due to exemptions. On the other hand, a company paying a net 18% rate right now would see its costs cut and could conceivably cut its prices to increase market share without lowering return on investment. Anything you save is tax free after that, assuming you invest it, so if you have capital gains your overall rate probably would go down. But it's really difficult to say whether your overall tax burden would go up or down because there are so many variables.

Thank you - I try to be as fiscally responsible as I can. I was very blessed to have parents that taught me this type of responsibility.

That is a lot of variables. Whether or not you are in favor of or against the plan, I think people can agree that it is interesting to think about all the variables and possible outcomes.

9-9-9 would bring in less money as far as I can see, so while government can and will always raise tax rates if allowed, government would HAVE to raise rates with 9-9-9. We simply cannot afford to lose tax revenue, and any significant cuts in government spending, no matter how advantageous in the long term, are going to cost jobs and kill us in the short term. It also gives us two consumer taxes so that government can raise them in a tick-tock fashion. I'd certainly support going strictly to a national sales tax or just removing the corporate tax completely, which would have the result of removing a lot of the cost penalty that US firms have now and would thus make American companies more competitive against imports, but it seems to me that 9-9-9 benefits companies that outsource at least as much as those who produce domestically.

I would imagine significantly scaling down the IRS, Cain's plan to repeal the National Health Care Bill (Obamacare is demeaning in my mind), and implement some other cuts will accomplish some of the short term fixes.

I can definitely understand the tick-tock fashion. I do know that Cain has stated that it would take 2/3's vote from Congress as well as Presidential approval to raise taxes though. So, while the government COULD raise taxes, I feel like it would be pretty difficult to do.

I don't know enough to speak about outsourcing; however, I did read that imports would be taxed in the same way as goods/services sold in the US.

With regards to zeroing out capital gains rates, that does potentially have some benefit for everyone, but it's weighted heavily to the top end of the scale. Someone earning $20K per year could save and invest, but it's likely that his profit would be dwarfed by that of those earning a lot of money who could afford to save and invest much more. It's true that a rising tide lifts all boats, but the climb from your little boat to Warren Buffett's big boat is likely to remain just as high, if not even get higher.

I can respect that and understand what you are saying, but I think it goes back to the fact that not everyone is going to be as financially blessed. They are both making money proportional to how much they are able to invest. If they keep investing/saving then there is a strong chance they can invest more and more and it can compound.

Most of the Warren Buffett's of the world didn't get as wealthy as they are overnight...

Lastly, I certainly agree there are no easier answers and that part of healing our society involves making people, corporations and government more responsible. I'm just very cautious about making major changes right now, as in this economic environment it's much more easy to justify laying off employees to meet new taxes or costs than to add employees because you have lower taxes or costs. To hire new people or invest in new capital ventures businesses need not only to have the money, but they also need an analysis showing a probable return on investment. Overall I like some things in this plan, more in principle than in details, but I can't support it.

I can absolutely respect that opinion. My personal thought is simply that our system is flawed from the get-go and I don't know that more regulation can fix it. Additionally, we, at this point, have found a million ways that things don't work - just seems like it is time to try something kind of radical

EDIT: And the thing about poor people is that the working poor heads of households currently get not only a portion of their payroll taxes returned, but often get welfare payments using someone else's money. These households would go from paying little or no taxes, or even getting a check, to paying 9%, then paying another 9% on everything they buy. For many of them there would literally be no point in working.

My response is a little off topic, but I don't think the government should be paying for people in that situation. Tax breaks I can get on board with (For instance, my Gross Income-Poverty Line idea), but (And admittedly I don't know all the factors) I can't get onboard with people paying no taxes while also getting a check.

I'm also wondering if food items will be a tax exemption at some sort.

One other thing of note is that if people are living under this little amountn of money, they can buy used goods free of tax. The sense of entitlement in society now that everyone needs a new TV, Cell Phone, etc... might be squashed out with this plan.

(See inline comments)

 

[Gamingphreek]

This assumes that the stock market players are playing fair and we have seen that isn't the case. Good luck 'un-retiring' at 70. Ask people over 55 how easy it is to get a new job. Look I am all for saving for retirement. I am doing it myself. It's good to know if shit doesn't work out that you got a little backup. It actually kinda boils down to what kind of society you want to live in. There was a time when SS didn't exist and I don't think the country collectively liked to have the elderly living in poverty.

Well a 401K for instance is unlikely to simply disappear or drastically alter your state of living if you have been putting in religiously. For instance, if I put in 6% of my salary, my company matches 5% (Not implying that all people are able to do this)

If the stock market is too unsettling, one could always simply start putting money away in a standard savings account.

As for un-retiring, if you saved enough money and just are a victim of the market or something, it is unlikely that you need a full-time professional job. If you do (and perhaps I am oversimplifying this), chances are you weren't saving properly for your projected style of living. Plenty of older people like to work as a starter at a golf course for instance to supplement their retirement income.

At this point, it seems harsh, but 9 times out of 10, if someone was able to put away for retirement and is living in poverty, there was a disconnect somewhere in their financial management.

 

[Fern]

I can definitely understand the tick-tock fashion. I do know that Cain has stated that it would take 2/3's vote from Congress as well as Presidential approval to raise taxes though. So, while the government COULD raise taxes, I feel like it would be pretty difficult to do.

Anybody thinking it would take 2/3's vote from Congress to raise taxes is badly mistaken.

It only takes a simple majority in the House to pass a tax increase bill. In the Senate, the budget reconcilliation process can used to pass a tax increase (Bush's tax cuts were passed under the budget reconcilliation process). When the Senate uses the reconcillation process only a simple majority is needed to pass a bill.

Fern

 

[Gamingphreek]

Anybody thinking it would take 2/3's vote from Congress to raise taxes is badly mistaken.

It only takes a simple majority in the House to pass a tax increase bill. In the Senate, the budget reconcilliation process can used to pass a tax increase (Bush's tax cuts were passed under the budget reconcilliation process. When the Senate uses the reconcillation process only a simple majority is needed to pass a bill.

Fern

That's the way it is now, but Cain has said that a provision in this restructuring would be to require 2/3 majority.

 

[Fern]

That's the way it is now, but Cain has said that a provision in this restructuring would be to require 2/3 majority.

Ah, OK. Thanks.

Not sure that can actually be done, but I'll leave it at that.

Fern

 

[yllus]

Haven't read the thread, but saw this pop up in my e-mail today and thought it might be discussion worthy.

The Curious Capitalist - The Cain 9-9-9 Plan: How Much Would the 99% Pay

Consider what it would do to the tax bill of a family making $50,000 and one making just over $500,000. Edward Kleinbard, a tax expert at the University of Southern California, who amazingly has already written a 13-page detailed paper on the Cain 9-9-9 plan, says the average family of 4 making $50,000 under our current system pays $8,416 a year, after deductions, in both income and payroll taxes. That equals an effective tax rate of about 17%. Now take the top 1%. To meet that mark that family would have to earn $530,000.

Under current tax law, taking into affect deductions like charitable giving and mortgage write-off, the top 1% pay an average of 29% of their income to Uncle Sam in payroll and income taxes. So, under current law the family making $530,000 will pay $153,700 a year in taxes.

Now to 9-9-9. The Cain plain lowers the income tax rate to 9%, and does away with the payroll tax. Nice. How does Cain pay for that? Well, he adds on the other two 9s - a 9% sales tax, and replaces corporate income taxes with a 9% business transaction tax, meaning instead of paying taxes on just earnings, businesses will now have to pay a 9% fee to the government for their net purchases every year. Most company's biggest purchase or expense is their workers, so it basically works out as a 9% payroll tax.

What would the $50,000 family and the top 1% have to pay? Well, under Cain's plan, the family earning $50,000 would see their income tax bill fall to $4,500. But they would also have to pay a 9% tax on everything they buy each year. Since most families of 4 on a $50,000 income spend nearly all of their income, that works out to another $4,500 in taxes. What's more, Kleinbrad figures that most companies have a fixed budget to pay for wages. So if the government adds on a 9% payroll tax, companies will simply pay 9% less in salaries to their workers. So for the family making $50,000, they pay another $4,500 in lower wages.

Total 9-9-9 tax bill: $13,500, or $5,084 more than what they pay under the current tax system.

Apply the same math (the supposed bonus of the Cain plan is that we all pay the same simplified rate) and the family making $530,000 would have a tax bill of $132,500. But that's only if they spend every dollar they make, which is probably not the case. Most wealthy individuals save or invest a good portion of their income. That will go untaxed in the Cain plan.

Assume the top 1% only spend half their income each year, and their tax bill drops to $119,250, or $34,450 less than they pay under the current tax system. What's more, the richer you are the larger you would see your tax bill drop.

 

[Bird222]

In short, this will hurt middle and lower class workers and greatly help the rich.

Well he admitted that some would pay higher taxes. Just like I said. Good luck with that Herman.