Simple example of the outrageousness of Cain's 9-9-9 plan

[xBiffx]

Cain has said only used items aren't taxed. Not sure if you can count foods as used items.

Consumed = used and vice versa.

 

[QuantumPion]

Please link to that, I can't find it on his website.

It was in the fair tax book, which is what Cain's plan is based on. Sorry I can't find a link. The source on wikipedia is unfortunately wrong (if you do a little digging, it is a critic of the fair tax quoting another critic of the fair tax who was actually talking about a VAT tax and is out of context).

 

[her209]

Consumed = used and vice versa.

How exactly does food fall under used?

 

[xBiffx]

How exactly does food fall under used?

Aside from stocking the zombie apocalypse bunker, what else do you do with your food?

Edit: Jello wresting still counts at used, sorry.

 

[Fern]

-snip-
What people forget about taxes is that they're paid on profits.

No one denies that there are embedded taxes.

There are far far more than income taxes at the federal level. We have a slew of excise taxes for example.

Fern

 

[KlokWyze]

It makes the Rich richer and penalizes people of limited means....MISSION ACCOMPLISHED!

The primary goal of the GOP. Nothing else is nearly as important to them. :thumbsdown:

 

[Gamingphreek]

The main problem with a large consumption-based tax is that it's highly regressive. Many households have no choice but to spend almost every dollar they earn. Yet those higher up on the income scale can decide to consume less, and therefore pay an overall percentage of their income LESS than those lower down.

I can understand what you are saying there. While that may be true given a truly flat sales tax scenario (Flat income tax shouldn't be regressive), I think there are a lot of things Cain has stated that should fix that (ie: Used items are untaxed)

While this has nothing to do with Cain other than the fact that he may implement something similar.

-I feel like the poverty line needs to be adjusted and much more dynamic (ie: Regionally based)
-I would be interested to hear the affects of only being hit with the income tax on your Gross Salary minus the poverty line while being limited at 0.
-Food should remain untaxed (Beer and cigarettes are not food)

I would be interested to hear what would happen with food.

-GP

 

[Gamingphreek]

The primary goal of the GOP. Nothing else is nearly as important to them. :thumbsdown:

You have done nothing to add anything to this thread other than attempt to start a flame war. Everyone here is having a civil conversation, please stop trying to derail it!

 

[Fern]

Just out of curiosity (Not meant to derail the thread), why do you prefer taxing based off of production instead of consumption.

For me personally, I like the idea that if I want to save instead of consume more, I can. I like the idea that I get to determine how my money is spent knowing full well Uncle Sam gets some of it should I choose to spend it.

Just wondering

Production is what creates wealth.

I find an economic justification in production taxation. Those generating or creating wealth have the actual capacity to pay taxes because of their increased wealth/income. Our system facilitates the production, so share some of your 'excess production' to help pay for it.

If I invest in a home, and it's value declines I lose money. I'm screwed but under consumption tax if I take what is left after my loss and need to spend it I'm taxed. Let's just tax 'winners' and not losers.

A switch to consumption based taxation is particularly offensive to those who been saving while being under an income tax system. So, they paid tax on the income they saved, now we switch the tax system to consumption and their already taxed once money is taxed again as they spend it. I don't imagine this would this fair to retirees.

Discouraging consumption just encourages people to not buy your products. That's bad for the economy. To an extent saving is a good thing but we can encourage that without a consumption based tax system. We already do.

Fern

 

[blackangst1]

Not sure what you mean.... under the current system, taxes are always increasing even when moving from one marginal tax bracket to the next.

I wasnt asking about the current tax system. Let me try and be more clear.

Most say the 9-9-9 plan increases taxes on the poor and middle class and decreases taxes for the rich. What is the income level where it goes from increasing to decreasing.

 

[OutHouse]

Currently, a family of four with an income of $50,000 annually pays about $10,000 in taxes, said Cain. Under 9-9-9, they would pay $4,500 in income tax, leaving them over $5,500 to decide how to spend on sales taxes for new goods.

“They are still going to have money left over,” said Cain.

yes Cain is correct, i pay about 11K in federal taxes. after i do all my deductions, for kids, house, retirement blah blah blah i get about 6K back.

soooooo what point were you trying to make?

in my opinion get rid of all tax breaks (its my fucking money in the first place), loopholes, deductions of any kind. EVERYBODY PAYS 9% period end of story.

 

[Anarchist420]

No, it's not the status quo.

I think it represents a philosophical shift of sorts regarding federal taxation. IMO, what Cain and his economic advisors are advocating is a shift away from taxation based upon production and towards consumption. I cannot agree with that philosophy.

Fern

I can see where he wants to tax consumption and that's different from what some progressives want, but a national sales tax and a flat tax have long been the neoconservative status quo. Sales tax and Income tax are the status quo. It's revenue neutral. It's neither a return to exclusively tariffs for revenue only nor does it give the power of taxation back to the states.

In order to be against the status quo (IMO), you either have to advocate reducing Federal revenues, exclusively a state rate tax (combined with a repeal of the 17th Amendment) putting the hands into the states and decentralizing the system, or a return to nothing other than low tariffs. Wanting taxes to be "fair" has been the status quo since the 1890s. The Republicans are just as bad as the Democrats. They both want to fiddle with the code without reducing overall taxes.

 

[Gamingphreek]

Production is what creates wealth.

I fond an economic justification in production taxation. Those generating or creating wealth have the actual capacity to pay taxes because of their increased wealth/income. Our system facilitates the production, so share some of your 'excess production' to help pay for it.

If I invest in a home, and it's value declines I lose money. I'm screwed but under consumption tax if I take what is left after my loss and need to spend it I'm taxed. Let's just tax 'winners' and not losers.

A switch to consumption based taxation is particularly offensive to those who been saving while being under an income tax system. So, they paid tax on the income they saved, now we switch the tax system to consumption and their already taxed once money is taxed again as they spend it. I don't imagine this would this fair to retirees.

Discouraging consumption just encourages people to not buy your products. That's bad for the economy. To an extent saving is a good thing but we can encourage that without a consumption based tax system. We already do.

Fern

Interesting - I can definitely understand your views.

At the same time, shouldn't Cain's tax plan then be ideal (Assuming Phase 1 only). Since you are not in favor of a consumption tax, but feel that saving is a good idea, wouldn't some form of Income and Sales tax be appealing to you (Just moreso on the Income side of things)?

Definitely understand the argument against existing money being taxed again as well. I don't know that I have an argument against that other than, "ouch". I do feel like this tax system needs a do-over though, not just a set of tweaks... seems as though you will always step on someone's toes when doing that.

They both want to fiddle with the code without reducing overall taxes.

Anarchist, I have to disagree here. Without getting into party platforms, I feel like Cain's goal in this is to eventually lower taxes. Unfortunately, given the state of the economy and the out of control spending, it just isn't possible yet.

I do agree with you that both sides seem to want to fiddle with the tax code instead of redoing it though (Outside of Cain). This is one of the reasons, for me at least, that makes Cain a very intriguing option. (I'm conservative so I don't agree with Obama and the liberal side of things, and I feel like Romney and the rest represent a lot of the status quo)

-GP

 

[Ronstang]

It's time to take the deductions away for kids anyway. Why should you get a tax break for having kids while the people with no kids get to pay a LOT more taxes when people with kids consume WAY more government services. People need to start paying for their own damn kids. If they had to maybe more would think it through a little better before spitting out a couple of useless kids. Our government spends most of the time trying to insulate the wrong people from the consequences of their actions and then everyone sits back and wonders why everything is going to hell.

 

[Fern]

Interesting - I can definitely understand your views.

At the same time, shouldn't Cain's tax plan then be ideal (Assuming Phase 1 only). Since you are not in favor of a consumption tax, but feel that saving is a good idea, wouldn't some form of Income and Sales tax be appealing to you (Just moreso on the Income side of things)?
-snip-

I already pay about 7% in state sales tax and save what I can. I think 7% is already sufficient to discourage unnecessary consumption. Think about people with a family and kids, or high recurring medical expenses, many are already on a tight budget. You're not so much encouraging saving, you're reducing their pool of money to spend on essentials.

We already have many good programs to encourage savings. 401K, IRA, Money Purchase Plans, Profit Sharing Plans etc. I think these programs allow the fed govt to put some very good stipulations/restrictions on those savings accounts you don't get with general consumption taxes. For example, you can't borrow against these savings, you must generally avoid certain risky investments, and you can't spend it until you're in retirement without penalty.

Some countries do NOT tax interest or dividend income until it gets up to a certain amount. That's a very good way to encourage saving.

In general, I don't yet see us needing to discourage consumption. I see us needing to encourage production and the creation of wealth. Clearly we have a class of people who feel the need to live beyond their means, borrowing as much as they can. The govt merely needs to have policy that doesn't encourage that. We did take a step like that some time ago by eliminating the tax deduction for personal interest. And if banks and CC companies want to lend to those types when they get burned they shouldn't be bailed out.

I also think the Fed's monetary policy needs to be better thought out. In poor economic times making cheap or free money available to all might help the economy get moving but why not prevent it from going to unqualified people who are just going to buy more Chinese crap they cannot afford?

I've been contemplating the idea of dropping monetary policy and using tax policy to regulate the economy. Instead of raising and lowering interest rates, raise and lower tax rates. When the economy get's heated up instead of jacking interest rates, raise tax rates. That'll put a damper on the economy AND generate a bunch of govt revenue during the good times so we can pay down debt. Vice versa in bad times. Have the rate pegged to GDP growth.

Fern

 

[Fern]

It's time to take the deductions away for kids anyway. Why should you get a tax break for having kids while the people with no kids get to pay a LOT more taxes when people with kids consume WAY more government services. People need to start paying for their own damn kids. If they had to maybe more would think it through a little better before spitting out a couple of useless kids. Our government spends most of the time trying to insulate the wrong people from the consequences of their actions and then everyone sits back and wonders why everything is going to hell.

Number 1 the govt is not supposed to tax you into poverty. Aside from being stupid as all hell it's counter-productive.

A person working to support him/herself and others should not be paying the same amount of tax as the single person. The person supporting others simply needs more to pay for essentials. Of course, if your a high earner you can phase-out those personal deductions without imparing anyone's ability to survive.

The USA is already one of the most family unfriendly countries in the world. In many other countries in Europe you take the number of family members and divide the income by it, then go to the tax rate chart. For example a family of 4 with $100K taxable income divides it by 4 to arrive at $25K. Then you take the tax on that and multiply it by 4. Basically they get a much lower rate.

The fed govt also wants to encourage 'little taxpayers'. It's in it's own best interest. More taxpayers etc. SS is in trouble because we have fewer young workers supporting the elderly retirees. We need a broader 'pyramid' to support those retirees.

How in heck do "kids consume WAY more government services"? Other than public school my kid uses nothing. I pay more in R/E taxes than public school education costs. Then consider I paid in for years, decades even, before my kid ever started school. And I'll be paying R/E taxes long after he's out of school.

And it's my damn money. I earned it. I'll spend it on a kid if I feel like it. It's not like it's the govt's money and they're letting me have some. It's mine.

Fern

 

[DrPizza]

So, I can purchase a new vehicle for $20,000 and have to pay $1800 in federal taxes on it, or there is what amounts to an $1800 incentive to purchase a one year old vehicle. Used vehicle prices go up, but demand for newer vehicles goes down.

As a part time farmer, I'm left wondering about a few things - when I purchase feed for my animals, it's tax exempt. Is it going to continue to be tax exempt? Or will I have to pay a 9% tax on it? If I purchase a brand-spankin' new tractor for $40,000, it's tax exempt. Am I going to have to pay 9% tax on that tractor now? If such is the case, then the cost of production of food is going to go up. Will farms be able to depreciate their equipment? No? No more deductions like that? Expect the price of food to increase.

Cain's plan seems a bit shortsighted.

 

[IBMer]

in my opinion get rid of all tax breaks (its my fucking money in the first place), loopholes, deductions of any kind. EVERYBODY PAYS 9% period end of story.

If you are only paying 11k in taxes and you have kids, I think you misunderstand what is your money. How about all the services that you receive that say a single guy with no kids doesn't, but pays higher taxes? Private school isn't a cheap and public school isn't really free. Maybe people need to be reminded of that because they go spouting off "my money".

 

[werepossum]

Cain has said only used items aren't taxed. Not sure if you can count foods as used items.

Either way I'm pretty sure used food is not going to be popular under ANY tax proposal.

 

[Darwin333]

Cain has said only used items aren't taxed. Not sure if you can count foods as used items.

Sure you can, I just didn't realize there was a market for my used foods. Anyone know who is buying right now? I can drop a load off this afternoon.

 

[Darwin333]

So, I can purchase a new vehicle for $20,000 and have to pay $1800 in federal taxes on it, or there is what amounts to an $1800 incentive to purchase a one year old vehicle. Used vehicle prices go up, but demand for newer vehicles goes down.

As a part time farmer, I'm left wondering about a few things - when I purchase feed for my animals, it's tax exempt. Is it going to continue to be tax exempt? Or will I have to pay a 9% tax on it? If I purchase a brand-spankin' new tractor for $40,000, it's tax exempt. Am I going to have to pay 9% tax on that tractor now? If such is the case, then the cost of production of food is going to go up. Will farms be able to depreciate their equipment? No? No more deductions like that? Expect the price of food to increase.

Cain's plan seems a bit shortsighted.

OTOH, fertilizer (manure) will likely be tax exempt since it is most definitely "used".

 

[Darwin333]

It's time to take the deductions away for kids anyway. Why should you get a tax break for having kids while the people with no kids get to pay a LOT more taxes when people with kids consume WAY more government services. People need to start paying for their own damn kids. If they had to maybe more would think it through a little better before spitting out a couple of useless kids. Our government spends most of the time trying to insulate the wrong people from the consequences of their actions and then everyone sits back and wonders why everything is going to hell.

My kids both go to private school because I could not in good conscience send them to the public schools available to them. I own my house which means I pay, and have been paying, property taxes. They are covered by my insurance plan and have been since conception.

Please tell me what government services they consume WAY more of? From my side of the fence it looks like I am paying for government services that are not nearly adequate for me to even consider allowing my children to "consume", which equals a donation to society on my part.


OTOH, I am all for a simplified tax code. IMO a person should be able to properly figure out what they owe in 5 minutes and a single sheet of paper which includes the instructions. I find it rather absurd that I have to pay some asshole a decent sum of money to figure out how much I owe some other assholes. On top of that I do not trust Congress with the power of social engineering via the tax code and just to let everyone know, that is the single reason we will never EVER see a simplified tax code, Congress will never give up that kind of power.

 

[Lemon law]

Cain 999 plan if based on the half baked advice of an investment banking adviser with no economic credentials and nothing more. As various people run various numbers past us on a plan the is, as of yet, pie in the sky. But maybe at some near future point in time, we will have more credible numbers from something like the Congressional Budget Office that can be more relied on.

But where does this shit come from in terms of a potential President Cain promising anything, when tax rates and tax policy are set by the legislative branch and not the Prez.

As for me, I have run the numbers for me, and have concluded Cain is public enemy number #1, as it will shift the tax burden more and more away from the very rich and towards the average wage earner. And totally collapse the American economy in short order.

 

[spidey07]

Guys - if you don't incent having kids you wind up in a very bad place. You need a replenishing workforce which equals new tax payers. If done properly you get more from the new tax payers/productivity than the actual deduction.

IF those new tax payers actually work and pay taxes. You get double fucked if they don't (like today).

 

[Darwin333]

Guys - if you don't incent having kids you wind up in a very bad place. You need a replenishing workforce which equals new tax payers. If done properly you get more from the new tax payers/productivity than the actual deduction.

IF those new tax payers actually work and pay taxes. You get double fucked if they don't (like today).

So you are in favor of making legal all current working illegal aliens? They kind of perform the same function that you just stated.