The 9 percent income tax
The centerpiece of the 9-9-9 Plan is to eliminate the current, complicated income tax system -- with its series of tax credits and deductions and its variety of tax rates based on income -- and to replace it with a flat income tax. Cain's flat 9 percent income tax also would replace payroll taxes, which all workers pay and that fund Medicare and Social Security, and would end the estate tax, which is a tax on inheritances. Currently, about 49.5 percent of all tax filers pay no income tax at all, according to the Joint Committee on Taxation, a respected bipartisan committee of Congress. Cain's income tax would be collected equally for workers with two exceptions -- taxpayers could claim a deduction for charitable contributions (we haven't heard him discuss a limit) and taxpayers could earn a type of tax credit for living in an "empowerment zone," which Cain has described as inner cities needing revitalization. While the result of this part of Cain's plan would affect taxpayers differently, the flat income tax and the elimination of payroll taxes would result in shifting some of America's tax burden, making some poorer Americans pay more into the system while many middle- and upper-class Americans would pay less.
The 9 percent national sales tax
Cain's national sales tax, in effect, would attempt to make up for the reduction of federal revenue by creating the 9 percent income tax. The national sales tax, which would help fund the federal government, would be on top of state and local sales taxes, which fund state and local government. In Florida, that would create a hypothetical tax rate of 15 percent in most parts of the state. In the Wall Street Journal, Cain said the national sales tax would be levied "on all new goods." (A good question to ask would be whether services are exempted.) Most economists agree that a national sales tax would raise the relative tax burden on low- and middle-income earning taxpayers. "The main reason is that low- and middle-income households consume more of their income than high-income households do," said William Gale, senior fellow for economic studies at the Brookings Institution. "Another way of saying that is high-income households save more of their income than low-income households do."
The 9 percent corporate income tax
The nation's corporate income tax now stands close to 40 percent, so on the surface Cain's plan would be a huge reduction. But that's only part of the story. The current tax structure includes credits and deductions that often reduce the rate at which businesses pay income taxes. According to the World Bank, businesses on average pay an effective tax rate of 27.6 percent. (Of course, some businesses pay at a far lower rate and some pay more.) Like Cain's changes to the personal income tax structure, his plan for businesses would include eliminating many -- though not all -- of the credits and deductions businesses now enjoy.
Originally posted by pirhanna
The second problem is that is not going to generate anywhere near the income that the federal government receives now.
Originally posted by Matrix Rising
reply to post by beezzer
It's a bad idea. It's like giving a gun to a person that wants to commit suicide. It makes no sense to give politicians another tax on top of the income tax. It's a horrible plan and if another Obama gets in after Cain then 9-9-9 will skyrocket. Why even open that door? If you're going to do a national sales tax, then get rid of the income tax.
Originally posted by Cuervo
reply to post by seabag
You just articulated my confusion, as well. Why does the OP think they would be any more likely to raise taxes with the 9-9-9 plan than they currently do? Sure, taxes could be raised but taxes could be raised now. I don't know about anybody else but this would drop my taxes significantly.
Originally posted by jtma508
Eliminate the estate tax, eh? Who is that going to help? Less than 2% of estates have to file any return at all as it is and of those only a small number end up having to pay tax. And exatcly who do you think those people are? Yup, you guessed it --- the very wealthy. There is sizeable amount of money involved but it is coming from the very large estates. So this is, as usual, a lap-dog for the elite move.
Originally posted by Matrix Rising
1. Go to a Fair Tax where people keep all of their money and just pay a sales tax which would be revenue neutral.
2. Cut spending
3. Stop Government from spending money for S.S.
4. Pass a law that says Government can't spend more than 70% of GDP