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I've been interested in reforming the tax code for a long time, and recently a lot interest has gone into Herman Cain's 9-9-9 Tax Code.
His proposal is a new 9 percent uniform income tax rate would eliminate all exemptions and deductions, including those for child care, school tuition, health savings accounts and interest on home mortgages. There would also be a 9 percent business tax and a national 9 percent federal sales tax — with no exemptions, even for food and medicine. This would be paid by consumers on top of state and local sales taxes.
The majority of people that benefit from this tax system are people who used to pay the capital gains tax from the sale of stocks and bonds, which would be eliminated. Most of the people who pay this tax are wealthy.
You'll wonder how that can be, when this will slash even the lowest income tax rates, but it is pretty simple. Many Americans depend heavily on deductions and his plan eliminates all exemptions and deductions.
Let me tell you a real life example of what this tax code would do for America. Take my wife and I, we both work between 40 and 50 hours per week and in addition we own a business on the side. Combined we make less than 6 figures, but well over $65,000. So we aren't rich or poor, just middle class.
Last year we paid ~18% of our income (including business income) to the government in taxes, but since we are married and have a mortgage, we get some big deductions that reduces our overall income tax rate to 11%. So, with the 9-9-9 plan we would pay 2% less on our income taxes but get slammed when prices would go up 9% on everything we buy!
In total, we would pay roughly ~$6,000 more per year to the federal government (assuming our spending and income stays constant).
The rich can easily afford to pay for child care, but the average America struggles to pay for it, and the deduction currently for it helps people afford it. Herman Cain eliminates this deduction.
Students (who's family doesn't pay their way) struggle to pay increasing tuition costs (and my wife and I are only a few years removed from school) and the deduction helps people afford it. Herman Cain eliminates this deduction.
For first time home buyers, the mortgage deduction (where you can deduct 100% of your interest) makes home affordable (it did for me we got back over $2,500 per year from it, which is better savings that Herman Cain provides by cutting our taxes). Herman Cain eliminates this deduction too.
A 9% sales taxes increase is a massive increase that obviously is blind to class. Food would cost more for the average America and for Bill Gates. But only one of them has to plan a budget around basic food shopping.
I've always thought a conservative president wouldn't stand for tax increase. But if you are thinking about voting for Herman Cain, think very carefully. You'll lose any deductions you get for child care, school tuition, health savings accounts and interest on home mortgages. And you'll pay 9% more for everything you buy to save a paltry amount on taxes. Do the math for your own individual situation.
Saving 2% on my taxes to pay 9% more for everything I buy is no savings. And all this so people who sell stocks and bonds don't have to pay taxes on them anymore? I can think of two better tax plans for the average America, the one proposed by Mitt Romney, and the one proposed by President Obama.
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Why should I have to pay capital gains if day trading is my full time self employed job? Why am I the exception to the rule?
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LOL at anyone who thinks the 9-9-9 build could ever work. This crap is a distraction from real solutions to our economic crisis.
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My father pays almost 40% of his income to the government in taxes. I think that americans finally are paying normal taxes rather than high taxes (for their standards).
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This plan would clearly never work. You're right.
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As a Canadian, I'm hoping you can explain something to me.
Here we pay both federal and provincial taxes. I assume it's the same in the states, where you would pay fed and state taxes. Would Cain's plan just cover the federal portion of tax you pay, or all tax? what is the current sales tax in the US?
9% seems really low to be the only income tax you pay.
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Daytraders get rich, daytraders spend alot of money, daytraders pay alot of 9% spending taxes? the VAT in sweden is 25%, get over yourself, america
User was warned for this post
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Glad that I wasn't the only one who thought that this plan sounded crazy. Immediately on hearing 999 I thought to myself - oh good, balance the budget on the backs of those who can least afford it. Nothing against the rich, by all rights I will likely benefit from this plan, it's just wrong to ask people to live in virtual servitude while I enjoy a cushy lifestyle.
I'm in a slightly different place as the OP, even though my gf and I make just about the same income that you do we aren't married and I pull in a much larger portion of the income. The result is I get railed pretty badly when it comes to income taxes.
I pray that Herman Cain loses his head of steam. Perhaps people don't like haagen daz black walnut ice cream afterall?
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On October 17 2011 00:08 Catch]22 wrote:
Daytraders get rich, daytraders spend alot of money, daytraders pay alot of 9% spending taxes? the VAT in sweden is 25%, get over yourself, america
Way too completely generalize Americans. If you did basic research you would know that huge portion of this country wants tax cuts to expire.
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On October 16 2011 23:59 Darkalbino wrote:
Why should I have to pay capital gains if day trading is my full time self employed job? Why am I the exception to the rule?
People who gamble for a living are double taxed too. And like you, they gain money based on luck and chance. You're risking your money and not doing any real work.
And of all people, day traders got bailed out by people like me when all of your risky investments didn't work out and the system was about to collapse. I've never risked money in the stock in the market, but apparently I should have since I would have been bailed out.
How was that fair at all?
Day trading (like gambling) isn't a real job, and it currently wouldn't exist if capitalism worked like it should (no government intrusion, no bailouts, no tariffs, no intellectual rights protected). We should have let all the banks and investment firms fail, and the let old system collapse (and a collapsed system benefits people like me who didn't take risks). But it didn't, because the people who would have lost the most were the ones who created the system (the rich) and are involved heavily in government. They bailed themselves out.
We both took separate paths, your's didn't work out, so you cannibalized my path? How was that fair?
You my friend, are living off welfare.
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On October 17 2011 00:07 Fasterfood wrote:
As a Canadian, I'm hoping you can explain something to me.
Here we pay both federal and provincial taxes. I assume it's the same in the states, where you would pay fed and state taxes. Would Cain's plan just cover the federal portion of tax you pay, or all tax? what is the current sales tax in the US?
9% seems really low to be the only income tax you pay.
Sales tax varies by state. I live in New Hampshire and pay no sales tax (but there is a huge property tax). There is no federal sales tax.
And as I said in the OP, Cain's system doesn't affect any state or local taxes.
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You really need to contrast these kind of proposals with what we have currently. The 9-9-9 plan has plenty of flaws, of course. But every politician who doesn't have a reform proposal is basically advocating the following:
"My tax plan is to have a system of tax code that is tens of thousands of pages long and is so complicated that thousands of people will have to devote their entire education and career to studying it and figuring out how to work it. There will be countless provisions made for individual companies to create exceptions and special privileges, endless loopholes that can be exploited to reduce federal revenue, and hundreds of measures designed to benefit certain groups at the expense of others, based upon the fiat of politicians."
The system we have now is so stupid and nonsensical and inefficient and complicated that virtually any reform will be a step in the right direction. Don't get so caught up in the details of this specific plan, just recognize the NEED to establish a system that is simple, effective, and equitable.
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On October 17 2011 00:17 jdseemoreglass wrote:
The system we have now is so stupid and nonsensical and inefficient and complicated that virtually any reform will be a step in the right direction. Don't get so caught up in the details of this specific plan, just recognize the NEED to establish a system that is simple, effective, and equitable.
Absolutely agree. And I noted that in my opening statement and my closing statement endorsing the much simpler Romney and Obama plans (as compared to the current tax code).
But most Americans should not pay more with a new simple system, while the rich pay far less, as it would be with Cain's Tax Code.
Do the math for your own situation.
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Aotearoa39261 Posts
On October 17 2011 00:02 ScrubS wrote:
My father pays almost 40% of his income to the government in taxes. I think that americans finally are paying normal taxes rather than high taxes (for their standards).
But you have to appreciate that the government of the netherlands takes a more active role in the countries day to day running than the US government. Afaik, there is a strong sense of the right to choose and competition governing the market as opposed to government regulation. For instance, your 40% tax rate helps fund your public health system and operate any state owned enterprises you may have. Despite a move to change this in the US, healthcare is still heavily reliant on insurance to cover expenses and whatnot. So the money the US saves on taxes theoretically should be paid back in the form of things that are covered by the government.
Basically, the country has a different ethos towards these things than EU/other parts of the world. It's not really a matter of getting over yourself, rather the fact that one must appreciate the underlying differences between our cultures. Through doing that you will see why things like an 18% tax rate is accepted in the US and why any increases are frowned upon more so than in our countries.
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I really can't understand why so many people seriously consider Herman Cain as a viable presidential candidate. His tax plan is ridiculous, he's openly bigoted to muslims, and he's completely ignorant when it comes to international relations.
I agree that our tax code is in desperate need of reform, but something as silly as the 9-9-9 plan is not an answer. A teacher of mine in elementary school made a point of telling us that complex problems seldom have simple solutions. I wish someone would tell Herman Cain that.
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9%... Seriously? Here in the Faroe Islands we pay around 50% taxes, and as a result everything is pretty much free of charge.
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On October 17 2011 00:29 redmarine wrote:
9%... Seriously? Here in the Faroe Islands we pay around 50% taxes, and as a result everything is pretty much free of charge.
How hard is it to read Plexa's post? It's all highlighted and covered in waffles and such.
Even if we had 99% taxation, we still wouldn't get half of the crap Europeans get from their government. We still have $14.2T to pay off.
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The real problem isn't taxes but rather government spending. How can we reduce the size of the government? Cut spending and grow the economy in a productive manner; which means giving small business and private sector tax incentives.
This plan does not outline the payroll tax which is satisfied by both the employer and employee. How will that take into effect?
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On October 17 2011 00:40 AZN)Boy wrote:
The real problem isn't taxes but rather government spending.
It's taxes. If we had taxed instead of borrowing money from China we could spend all we want and it would be fine. We would be in a semi-euro state.
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EPT
