Cain's 9-9-9 Plan

[mnosteele52]

OK, I gotta get some input here, watching the debate tonight it amazes me how nobody understands his plan. As you may know I support Cain and think his plan is great. I have done a lot of reading on it, listened to a lot of debates on it and think it would be great. Here is my understanding of it so please correct me if I am wrong.

I will use an average American who makes $50,000 a year. As the tax code now stands a person/family making 50K is being taxed at a 25% federal income tax. Which means they would pay $12,500 a year in taxes minus deductions etc. For the sake of argument let's say they have no deductions. As it stands they re being taxed on the total they earned. With Cain's plan you would only pay a 9% federal income tax which amounts to $4,500. With his plan you would also pay a 9% national sales tax, but only on new products, not used products. But that 9% is only on purchases NOT on the total amount you earned, so you have gone from paying 25% of your total income to realistically 15% or so. I know people think you will actually pay 18% since 9 + 9 = 18%, but remember the 9% national sales tax in ONLY on purchases, NOT your total income. Also keep in mind that all hidden taxes are removed from goods that are purchased and there is ONLY a 9% sales tax added, so the total cost of goods would be less than it currently is and then you are taxed 9% on that lower price. Also with his plan it greatly broadens the tax base, all illegal aliens who are not paying a dime in income tax will now pay at least something, the 9% sales tax. Not to mention all the other cash flow in this country that goes unreported, you will also get 9% when goods are purchased.

Another thing that is brought up is that the federal government won't keep the national sales tax at 9%, they will continue to raise it. I don't buy that logic, what keeps them from raising taxes higher and higher now? Also, if this is implemented properly then it should not be allowed to be raised.

The other thing that candidates brought up is that you are adding a 9% sales tax on top each states current sales taxes....... so what?? As Cain stated, you are going to pay your state sales tax NO MATTER what you pay in federal taxes. So let's say your state sales tax is 5%, in the current tax plan you are paying 25% on your total income PLUS the 5% sales tax. With Cain's plan you are only paying 9% income tax (16% less than the current code) then a total of 14% sales tax (9% national sales tax and 5% state tax). But remember, that's 14% on purchases NOT the total of your income, you would have to spend all 50K you earned for the 9% national sales tax to even come close to what you are currently paying now at 25%.

I also think that EVERY American should pay taxes, regardless of your income. And with his plan it's relative to everyone 9%, not 0% for some and 35% for others. I don't believe you should be punished, I mean taxed more just because you earn more. If you think it's fair to have higher taxes those who earn more then let me ask you this. When you do your weekly grocery shopping along side the guy who makes 4 times as much as you should he pay a higher tax rate on his groceries? Absolutely not, fair is fair, we should all pay the same percentage.

Please discuss.

[YARDofSTUF]

I like some parts of it and others im not so sure I like the direction on. For some states the sales tax will be near 18%. And what would be exempt from it?

I dont see how the cost of goods would be less than it is now with an increased sales tax, that needs more explaining.

Would deductions still be allowed or no? Seem to see a lot of places saying just charity deductions would be allowed, no exemptions or incentives. Families that pay nothing or almost nothing now would be hit with 9% on what they make and 9% more on what they buy, that could be huge.

Not sure how it would do for small business owners too.

Also to compare to your numbers for a 50k a year family:

"We’re not sure how Cain calculates that this family now pays $10,000 in taxes, but the reliable Tax Foundation calculator comes up with a much more reasonable figure: a total tax bill of $3,515 — $690 in federal income taxes and $2,825 in payroll taxes. (The family gets a big income-tax savings from the child tax credit, which Cain would eliminate.)"

http://www.washingtonpost.com/blogs/fac ... _blog.html

[64bit]

Cain has 0 chance of becoming president so 999 or 222 it doesn't matter. Rich people love flat tax schemes so "Cain proposing" this isn't a shock.

[mnosteele52]

Cain has 0 chance of becoming president so 999 or 222 it doesn't matter. Rich people love flat tax schemes so "Cain proposing" this isn't a shock.

Please don't post if you have nothing to add.

[mnosteele52]

YARDofSTUF my understanding is that there are no deductions other than charitable ones. But my personal feeling on that is deductions are the loopholes that are in place now, even with me for example, I don't think I should get a get a deduction for having children, if I can't afford to have children I shouldn't have them. Deductions to me are simply the loopholes that allow the uber rich to pay no taxes, so why should I benefit from a deduction at my income level if others cannot? Fair is fair, we should all pay something that is relevant to each one of us and a percentage be it 9% or whatever is relevant. Taxes are a necessary evil that must be paid for the government to function, I have no problem paying my fair share. I do have a major problem with almost 50% of Americans paying nothing and the way my tax money is spent i.e. TARP, bailouts, Obamacare etc.

[YARDofSTUF]

The deductions help the poor more than the rich. And someone could have had the money to raise a child at the time they had the kid, but could have lost their job on the child could have had the need of great medical expenses as well.

As to your 50% number:

http://www.politicususa.com/en/half-americans-taxes

That suggests otherwise.

And ya, the bailouts are no good. But this 9 9 9 woudl also "tax" money earned from years past if they buy stuff due to the sales tax, increase a burden on those living on social security or retired living on savings, and cost people money by having their health care premiums taxed.

And this 9 9 9 thign is only phase 1 of his tax plan? What are the others? I hear he wants to get rid of social security and medicare, what will replace them and what happens to the money those of us have earned towards social security? And what about those that collect SS for disability?

[Roody]

The deductions help the poor more than the rich. And someone could have had the money to raise a child at the time they had the kid, but could have lost their job on the child could have had the need of great medical expenses as well.

As to your 50% number:

http://www.politicususa.com/en/half-americans-taxes

That suggests otherwise.

And ya, the bailouts are no good. But this 9 9 9 woudl aslo "tax" money earned from years past if they buy stuff due to the sales tax, increase a burden on those living on social security or retired living on savings, and cost people money by having their health care premiums taxed.

And this 9 9 9 thign is only phase 1 of his tax plan? What are the others? I hear he wants to get rid of social security and medicare, what will replace them and what happens to teh money those of us have earned towards social security? And what about those that collect SS for disability?

This. Credit to Cain because he knows that a simple catch phrase appeals to people and 9-9-9 is as simple as it comes for a title. That said there remains a bunch of questions that need to be answered like you pointed out.

[mnosteele52]

The deductions help the poor more than the rich. And someone could have had the money to raise a child at the time they had the kid, but could have lost their job on the child could have had the need of great medical expenses as well.

As to your 50% number:

http://www.politicususa.com/en/half-americans-taxes

That suggests otherwise.

And ya, the bailouts are no good. But this 9 9 9 woudl also "tax" money earned from years past if they buy stuff due to the sales tax, increase a burden on those living on social security or retired living on savings, and cost people money by having their health care premiums taxed.

And this 9 9 9 thign is only phase 1 of his tax plan? What are the others? I hear he wants to get rid of social security and medicare, what will replace them and what happens to the money those of us have earned towards social security? And what about those that collect SS for disability?

That's also a liberal website, it's expected for them to say that. Every article I have ever read states that the number is between 45-50% of Americans do not pay taxes. As for those on social security or retired, they would no longer pay taxes on their investments and health care premiums would go down because Obamcare would be repealed, healthcare is a whole other topic. Also, Social Security and Medicare are going to fail if things stay as they currently are, he has a plan for that based on privatizing pension funds that in the long run would benefit everyone much better than the current system.

Thanks for the legit questions and logical discussion.

[Roody]

http://articles.sfgate.com/2011-08-08/n ... n-williams

This article hits on the point. That 40-50% is skewed because although technically correct they don't take into account the fact that in a lot of cases it's due to the fact they don't make enough money to have taxes taken out. Not to mention that they still pay on other taxes like payroll etc.

[Sava700]

easy to see this is bad... turn it upside down!

[mnosteele52]

http://articles.sfgate.com/2011-08-08/n ... n-williams

This article hits on the point. That 40-50% is skewed because although technically correct they don't take into account the fact that in a lot of cases it's due to the fact they don't make enough money to have taxes taken out. Not to mention that they still pay on other taxes like payroll etc.

But I think that is BS, if you earn money you should pay taxes, fair is fair. A society will eventually fail if only 50% of the people put into the pot but 100% take out of it. What about the estimated 20 million illegal aliens that pay no taxes?

[mnosteele52]

easy to see this is bad... turn it upside down!

OK peanut gallery LOL.

[YARDofSTUF]

That's also a liberal website, it's expected for them to say that. Every article I have ever read states that the number is between 45-50% of Americans do not pay taxes. As for those on social security or retired, they would no longer pay taxes on their investments and health care premiums would go down because Obamcare would be repealed, healthcare is a whole other topic. Also, Social Security and Medicare are going to fail if things stay as they currently are, he has a plan for that based on privatizing pension funds that in the long run would benefit everyone much better than the current system.

Thanks for the legit questions and logical discussion.

Ya its a liberal site that takes the opposite end of the view, and I've read other articles that are somewhere in the middle, its just a nightmare of numbers to do the my on my own. Healthcare premiums might go down with Obama's plan repealed, but if health care premiums are taxed it could cost people more money.

The big thing with any chagnes to social security, for me, is I want to know how it affects people like me, that have put into social security already. As that is part of my retirement calculation, and if I were to become disabled and unfit to work, the money I would get to live on. Really need him to disclose the full details before I hate on it, but theres a lot of questions for sure.

[YARDofSTUF]

But I think that is BS, if you earn money you should pay taxes, fair is fair. A society will eventually fail if only 50% of the people put into the pot but 100% take out of it. What about the estimated 20 million illegal aliens that pay no taxes?

The ever more common method for illegals to get work is with a fake social security number, so they pay some taxes, but unlike the legal immigrants and citizens are not able to benefit from the services. So it would be a good bit less than 20 million not paying taxes at all.

I'd be all for a high illegal immigrant tax. Let them stay and get taxed to hell to benefit us.

[CiscoKid]

So let me get this right...under this 9-9-9 plan, I would end up paying a total of 34.25% in taxes?

[mnosteele52]

So let me get this right...under this 9-9-9 plan, I would end up paying a total of 34.25% in taxes?

So you fit into the group of the other candidates who do not understand it? Explain to me how you came up with 34.25%?

[Philip]

When you consider all deductions/exemptions, the federal income taxes on median income families are about 10% anyway --> http://www.cbpp.org/cms/index.cfm?fa=view&id=3151

There is one fundamental flaw with all flat tax ideas, including 999. They place higher burden on ordinary income (which puts burden on low/middle income people) and ignore passive income (the rich).

Consider the following fact:
Median income families make most of their money from salaries, and spend all of the money they earn. The above plan will fully apply to them in both income and sales tax.
Rich people make most of their money through passive income (dividents/interest/distributions/capital gain), not from salaries. They only spend a small percentage of their income. The above "flat" tax will not apply to their income, and if they spend 10% of the money they make, the sales tax will only apply to those 10% they spend...

I'd agree to a flat tax if it applies to passive income, and there is an equivalent tax on capital gains/estate taxes so it applies to everyone equally, how's that ?

If you'd like to get into details, there is more. For example, the business portion of the 9-9-9 plan does not allow employers to deduct wages/salaries, which in essence means that they would pass it on and levy a 9% witholding tax on employees comensation... In addition to the 9% income tax. It's like a hidden 9% VAT.

[mnosteele52]

Excellent points Philip (Happy Birthday by the way). Rich people still earned their money at some point, you can't invest with nothing to invest, so when they earn their money they will pay their 9%. Then when they invest their money the economy grows thereby creating more jobs and a stable economy. But with the statement "Median income families make mosto of their money from salaries, and spend all of the money they earn", this goes back to what 90% of Americans have forgotten...... live within your means. That is what I was always taught and do, I don't make a lot of money, I'm a Firefighter and own Dr Tweak which only employs me, my wife does not work and I have 2 children with another on the way...... but I have zero debt, my only bills are a mortgage and monthly utilities, no car payments no credit card debt, I also have savings and a retirement plan. I am the exception because the general mentality in society is live off your credit cards, buy a home and car that you cannot afford, but don't worry if it all fails someone will bail me out (the government) or I will just file for bankruptcy and owe nothing. The mortgage bailout was just as much consumers fault as it was Fannie and Freddie and Congress. People bought homes they knew they could not afford banking on the hope that they would sell it and make a big profit.... didn't work, lived beyond their means and expected the government to bail them out. Don't gamble with what you cannot afford to lose.

[Roody]

But I think that is BS, if you earn money you should pay taxes, fair is fair. A society will eventually fail if only 50% of the people put into the pot but 100% take out of it. What about the estimated 20 million illegal aliens that pay no taxes?

Illegal aliens is the big problem. I sympathize with a person and/or family who doesn't make enough money to live above the poverty line. In those instances those families need help.

[Roody]

So you fit into the group of the other candidates who do not understand it? Explain to me how you came up with 34.25%?

In his defense there is a lot of things that Cain hasn't answered and he even admitted recently not everyone would get the benefits of 9-9-9 which is ironic to say the least.

[mnosteele52]

In his defense there is a lot of things that Cain hasn't answered and he even admitted recently not everyone would get the benefits of 9-9-9 which is ironic to say the least.

I understand, but I felt as if I explained things fairly well in my original post and I would like to see where he came up with the figure of 34.25%.

[blebs]

Being on the poor end of the scale, I think this plan stinks. Of course, if Cain were elected president, he alone could do nothing about implementing this plan. Last heard, that was what Congress was for. 9% flat tax for someone like myself is financial suicide, yet millionaires will still be millionaires. Some say it's the only fair way, but from my seat, this is not fair at all.

[Roody]

Being on the poor end of the scale, I think this plan stinks. Of course, if Cain were elected president, he alone could do nothing about implementing this plan. Last heard, that was what Congress was for. 9% flat tax for someone like myself is financial suicide, yet millionaires will still be millionaires. Some say it's the only fair way, but from my seat, this is not fair at all.

I wouldn't worry about him getting elected. From a public office perspective he is less experienced than Obama was and the lack of experience was a big complaint of the Republican Party in 2008. Not that it would prevent them from changing the narrative. I just don't see it happening. At this point I would bet on Romney.

[Roody]

Here's a non-partisan report on the 9-9-9 plan.

http://money.cnn.com/2011/10/18/news/ec ... hpt=hp_bn5

[YeOldeStonecat]

Rich people still earned their money at some point, you can't invest with nothing to invest, so when they earn their money they will pay their 9%.

Eh...not the rich that I'm used to dealing with up in my area. It's old old well known rich families that have handed down their wealth generation..after generation...after generation....they don't work anymore. There's such a huge bank account they can afford a lavish life simply living off of the interest of those accounts.

[YeOldeStonecat]

When I first heard of this plan...I was sorta interested in it. Seemed interesting. Today I'm at the office doing stuff...and have the opportunity to read up on it more. I'm not liking the plan as much anymore.

To me...money should be treated like a consumable..that more that goes through your hands...the more you should pay for it. To someone that makes say...just $30k per year...family of 4....versus someone that makes $130k per year....family of 4. Clothing, food, day to day household expenses, the necessities are about equal...but a flat tax removes a much larger portion of money from the 30k per year persons monthly budget. The person making 130k per years only has to pay the same amount as the lower income family....and has a much larger portion remaining. He's not stretched thin.

If I am making more money, I don't mind getting taxed more. I recall in my younger years...a job that allowed me to work lots of overtime...once I got past 65 hours my pay basically turned back to straight pay instead of time and a half pay...because taxes took a bigger bite out of my paycheck. Didn't bother me then, wouldn't bother me now.

With this flat tax plan..it seems the "wash even point" for it to be beneficial is for those households that earn above 130-150k per year. So for those under...it'll hit your wallet harder than current taxes. Above 150k/year..that ain't me....so I'm not as fond of this plan anymore.

Even though Cain goes under the Republican label...his plan doesn't seem enticing to small businesses.

[mnosteele52]

Old money, I see your point but as it stands you are not getting any tax revenue from it, right? With a 9% national sales tax you would get something. But if this was in effect generations ago then there would have been a 9% tax on when it was earned. You have to forget everything you know about taxes as we know it and understand there are only 3 taxes. If you look at some websites that show how much the average consumer spends on things you would see that the 9% national sales tax would not greatly effect most since most consumers don't spend that much of their income on new items. Remember also that the price of goods would go down since they are taxed less, which now the added taxes are passed onto the consumer.

[YARDofSTUF]

How are goods taxed less under 999? Wouldn't the manufacturers be taxed 9% on their purchases of of materials and services just like an individual? And no you cant forget everything you know about taxes, ans state and local taxes still apply.

[mnosteele52]

How are goods taxed less under 999? Wouldn't the manufacturers be taxed 9% on their purchases of of materials and services just like an individual? And no you cant forget everything you know about taxes, ans state and local taxes still apply.

OK, then forget everything you know about federal taxes .

From my understanding and I could be wrong, no, manufacturers would not be taxed 9% on materials.

[JC]

How are goods taxed less under 999? Wouldn't the manufacturers be taxed 9% on their purchases of of materials and services just like an individual? And no you cant forget everything you know about taxes, ans state and local taxes still apply.

My understanding is the tax only applies at the "retail" level. Companies would then "save" money and ultimately reduce prices.

[RaisinCain]

Does anyone honestly think that the GOP will endorse an African American? Do you honestly think "they" would run an AM against another AM? Most likely Mitt will get the "endorsement". Sad if you ask me.

[mnosteele52]

Does anyone honestly think that the GOP will endorse an African American? Do you honestly think "they" would run an AM against another AM? Most likely Mitt will get the "endorsement". Sad if you ask me.

WOW, that is one of the most racist statements I have heard in a while. WHO CARES WHAT COLOR SOMEONE IS??????

[Philip]

My understanding is the tax only applies at the "retail" level. Companies would then "save" money and ultimately reduce prices.

Not with his 9-9-9 plan, the 9% corporate "income" tax is actually a VAT, it is another 9% consumption/sales tax.

[JawZ]

Personally I think it's too early to tell if Cain's plan has teeth. Most fact check type organizations can't fully decipher it as they are awaiting input from Cain's people. Once the full details are available, then I can evaluate.

[JC]

Not with his 9-9-9 plan, the 9% corporate "income" tax is actually a VAT, it is another 9% consumption/sales tax.

Compared with current corporate tax rate of 35% , I'll take the 9%. The 9-9-9 plan is actually a gateway to the "fait tax".

[Easto]

I think the biggest problem is what we are currently doing with the tax dollars we are paying now. Too much corruption, too many pet projects and too many Federal employees thinking they have a free ride. If the money was spent wisely I don't think we would be having this conversation.

[Philip]

Compared with current corporate tax rate of 35% , I'll take the 9%. The 9-9-9 plan is actually a gateway to the "fait tax".

S-corporations (up to 100 shareholders) pass income to shareholders, no corporate tax and no double taxation of income. Also, income taxes get applied after you expense salaries, unlike the 9-9-9 plan.

[RaisinCain]

WOW, that is one of the most racist statements I have heard in a while. WHO CARES WHAT COLOR SOMEONE IS??????

I'm not "racist"- I hate everyone the same. Seriously, do you think Cain will get the nom? Uh, nope. If you honestly think that the Dems and the Reps will run 2 African Americans at the same time you're wrong. It will most likely be Mitts dumb ass.