The 9-9-9 Plan

[rich_t]

At least the 9-9-9 plan makes sure that everyone has some skin in the game.

We 53% are getting tired of carrying the load of the other 47%.

[Eupher]

At least the 9-9-9 plan makes sure that everyone has some skin in the game.

We 53% are getting tired of carrying the load of the other 47%.

Yep, I'll go for that. Except I don't trust the bastards -- there'll be weasel wording along the way and some rat**** shitstain liberal out there will whine about having to pay taxes, and the assholes will be writing in exemptions and deductions and there again, we're off to the same ol' game.

I dunno. I think I'm going to have to study this in more detail, and there's no doubt the system is brokedick and needs to be thrown out, but I see a need to rein in government spending AND cut taxes AND making sure that the shitstain 47% are carrying their load.

[rich_t]

I think it's fair to look at the overall tax burden -- irrespective of where the taxes come from and who assesses them. That's not unrealistic and I think it's relevant to the issue. As to actually reducing taxes, isn't that our end goal? Apart from reshuffling the deck and dealing out the same old cards, I'd like to see actual reduction as a result of 999. Otherwise, what's the point? Either way we go, the government still spends money like drunken sailors and we're footing the bill.

I'd like to see some serious attempts at spending cuts by the Fed Gov't. not the lame ass mouth service we've been seeing.

I understand your point on looking at the over all tax situation as a whole, but the fed has no control over state and local taxes, nor should they.

[rich_t]

Yep, I'll go for that. Except I don't trust the bastards -- there'll be weasel wording along the way and some rat**** shitstain liberal out there will whine about having to pay taxes, and the assholes will be writing in exemptions and deductions and there again, we're off to the same ol' game.

I dunno. I think I'm going to have to study this in more detail, and there's no doubt the system is brokedick and needs to be thrown out, but I see a need to rein in government spending AND cut taxes AND making sure that the shitstain 47% are carrying their load.

I don't trust the bastards either, but we have to start somewhere.  The status quo simply won't work much longer.

[Eupher]

From HotAir.com:

Herman Cain got what he wanted from this week’s debate — he drew attention to his 9-9-9 plan for tax reform, and he proved that he could handle attacks from the field and maintain his aggressiveness.  But now that Cain has drawn attention to the plan he says will jump start the economy, he will find more questions and challenges as well as supporters.  In the latter camp, Art Laffer has given his supply-side stamp of approval:

Famed supply-side economist Art Laffer told HUMAN EVENTS that Cain’s “9-9-9″ plan was a pro-growth plan that would create the proper conditions for America’s economy to grow and thrive again.

“Herman Cain’s 9-9-9 plan would be a vast improvement over the current tax system and a boon to the U.S. economy,” Laffer told HUMAN EVENTS in a statement. “The goal of supply-side tax reform is always a broadening of the tax base and lowering of marginal tax rates.”

Added Laffer: “Mr. Cain’s plan is simple, transparent, neutral with respect to capital and labor, and savings and consumption, and also greatly decreases the hidden costs of tax compliance. There is no doubt that economic growth would surge upon implementation of 9-9-9.”

Laffer also said that “such a system provides the least avenues to avoid paying taxes, yet also maintains the strongest incentives for work effort, production, and investment.”

On the other hand, ABC News walked through the implications for a household of four earning the average national wage of “just under $50,000,” and finds that these middle-class voters will get squeezed, and squeezed hard.  That’s largely due to the third “nine,” the new federal sales tax that Cain’s proposal would create in tandem with flat taxes on personal and corporate income (also see update below):

If you have a family of four with an income of just under $50,000, they would pay more under the Cain plan. Currently, they are taxed at just less than 7 percent and pay $3,400 in income tax. Under Cain’s plan, they would be taxed at 9 percent or pay $4,500.

That’s $1,100 more.

Although the family would save almost $4,000 in Social Security taxes, it would have to give up the child tax credit of $4,000. Furthermore, it would pay an additional national sales tax of 9 percent on everything purchased, including groceries and clothes, which totals about $2,000.

That means under the Cain plan that family would be almost doubling its taxes, going from $3,400 to $6,500.
Most of the damage in this case comes not from the flattening of the tax code and the elimination of deductions — which would be almost entirely offset by the elimination of other tax streams, as Cain promises — but from the national sales tax.  In my column for The Fiscal Times today, I question whether conservatives want to champion a new tax that almost by definition will have a regressive impact on voters — and could open a constitutional Pandora’s Box that will undermine arguments against creeping federal encroachment.  But first, let’s be clear as to what exactly 9-9-9 is — and isn’t:

End quote

The rest of the article talks toward the differences between Romney's plan (which is much more comprehensive) versus Cain's 999 (which is touted as tax reform rather than an overall budget plan).

And then there's the constitutional issue to contend with. It's a long article, but well worth the read.

HotAir

[Erasmus]

Well, since the Fair Tax is actually a 30% sales tax, I can't support it, and the people promoting it should be ashamed of themselves for being dishonest.

For the same reason as others have mentioned, I'm not in favor of the 9-9-9 plan because it adds a third leg to the taxing ability of Washington.  Anyone who thinks it would stay at 9-9-9 is kidding themselves.  The very last thing Washington needs is one more lever to pull and knob to turn in their taxing authority.

I do like Herman Cain, though, and I'm impressed that he, unlike any of the other candidates, actually has floated a plan.

Also, a national sales tax will inevitably require additional IRS staff.  Sales taxes aren't really that simple outside of buying things at the grocery store or the mall.  So, manyof the positions that could be eliminated in the income tax department will have to be refilled in a sales tax division.  Contractors and retailers often get state audits of sales tax and determining first use, second use, etc., is always an issue.  The sales tax would have to be carefully drafted and won't be nearly as transparent and simple as people make it out to be.

[Eupher]

Well, since the Fair Tax is actually a 30% sales tax, I can't support it, and the people promoting it should be ashamed of themselves for being dishonest.

For the same reason as others have mentioned, I'm not in favor of the 9-9-9 plan because it adds a third leg to the taxing ability of Washington.  Anyone who thinks it would stay at 9-9-9 is kidding themselves.  The very last thing Washington needs is one more lever to pull and knob to turn in their taxing authority.

I do like Herman Cain, though, and I'm impressed that he, unlike any of the other candidates, actually has floated a plan.

The HotAir article I quoted just above your post talks about Cain's tax reform 999 (he calls it Phase 1, which goes out to the "final" phase when the Fair Tax kicks in -- so that right there tells you where Cain is headed with a national sales tax).

Romney's own "comprehensive" budget plan at some 160 pages is beefier, but I've not read any part of it. The HotAir article summarizes it as a budget reduction plan, deficit reduction, and energy and trade policy.

[Rebel]

Well, since the Fair Tax is actually a 30% sales tax, I can't support it, and the people promoting it should be ashamed of themselves for being dishonest.

That's because it's NOT a 30% sales tax. This is a tax that replaces all federal taxes. It's at 23% and would be by law. I don't give a damn what your state sales tax is; take it up with them. This is a replacement for payroll, income, corporate, capital gains, and estate taxes. There is also a 22% embedded corporate tax on every good you purchase, which will be removed. People will wind up paying between 1-2% over what they're paying now for goods while keeping their entire paycheck, minus what your state takes. Don't conflate state and federal and don't tell me I should be ashamed because you're too ignorant to do your own ****in' research on the matter. Have you read the book? Either of'em? How about the condensed version, "Answering the critics"? That seems to be right up your ally.

The bill is also authored to where it won't take effect until 1 day after the 16th Amendment is repealed. It also comes with a prebate up to the poverty level, about 150 per month per person. 

[Rebel]

As for the 9-9-9 plan, here's a post from someone I know elsewhere that goes by "Owl69/70/75":

OK, let's run the numbers. They're easy to find, and the math's not hard.

9-9-9 replaces the individual and corporate income taxes, social security taxes, and the estate tax. Let's look at 2005, because of quirks in some tax laws ofter that. Per the historical tables in the 2012 budget request prepared by Obama's OMB, receipts for 2005 were $927 billion from individual income taxes, $278 billion for corporate taxes, $794 billion for social security, and $27 billion for estate and gift taxes, total $2.026 trillion.

For the same year, per the IRS, individual AGI was $7.422 trillion, less $166 billion in dividends and $20 billion in partnership/S Corp income (taxed elsewhere under 9-9-9) for a net of $7.236 trillion. Business income was $3.346 trillion. GDP was $12.398 trillion, and the studies that I've seen have indicated a consumption tax base would range from 80-85% of GDP, so let's say $10 trillion. That makes a total 9-9-9 tax base of $20.582 trillion, and 9% of that is $1.852 trillion.

That's an apparent shortfall of $174 billion, except that we have run these calculations with income defined under current tax law, including loopholes variously estimated as having a tax effect approximating $1 trillion, and those loopholes are eliminated. You wouldn't pick up the full $1 trillion in tax effect, because the additional income would be subjected to lower marginal rates. Assume half the loopholes are outright credits (no impact on this analysis) and half are from deductions defining taxable income. So you have $500 billion in additional tax at existing rates, say 30% on average, or approximately $1.7 trillion in additional taxable income. At 9% that gives another $150 billion in revenues, essentially closing the gap. $24 billion is about as close as you can get to revenue neutral in this kind of analysis.

My 15-15-15 approach works similarly but at a higher rate because I want to incorporate the Boortz-Linder prefund at 30% and I also want to narrow the budget deficit. So I take the $22.3 trillion tax base ($20.582 trillion plus $1.7 trillion) times 15% to give me $3.345 trillion in revenues. The Boortz-Linder prefund costs about $700 billion, so I'm at $2.6 trillion net. I also want to do French health care which costs $900 billion. The combination of the prefund and French health care means that nobody, not a single person, is more than a minimum wage job away from being above the poverty line. That's about as good a welfare safety net as we want or need, comparable to Europe and way better than what we have now. I fund that by ending Medicaid (now redundant) to save $350 billion, offsetting $150 billion of Medicare cost (the first $3,000 for each of 50 million seniors), and getting $300 billion of the rest from cuts in "means tested" social welfare programs because the prefund essentially disqualifies everyone. That leaves $100 billion to come from the additional tax revenues and $500 billion to go to deficit reduction.

Now I have to chop $500 billion off the spending side to balance the budget. I get $100 billion by bringing the troops home from Germany and Japan, and converting the majority of those slots to reserve billets (save 80% of personnel costs associated). Cato, Rand Paul, Tom Coburn, and CBO have all identified cost savings well in excess of the remaining $400 billion. Pick and choose the best from their offerings.

I ran this before with slightly different numbers for a different base year, but it pretty much always falls in this range. There are a lot more sophisticated analytical techniques to try to nail down the numbers more precisely, but this approach is close enough--and good enough--for a discussion board or a political campaign. The one thing that those more sophisticated analyses typically show is that this sort of tax structure will generate something on the order of a 1-2% uptick in economic growth, and that solves a LOT of problems.

[Eupher]

Now that you're hot under the collar, Reb, it's probably a good time to ask the question:

This corporate tax you mention, that's embedded in goods and services - where is it written that this tax will just "go away"?

Do you mean that since the government isn't taxing the shit out of corporate America, that corporate America will be dropping their prices accordingly?

They're supposed to do this on the honor system? Or is there some other mechanism that compels those actions, other than supply and demand and the marketplace?

[Rebel]

...and this plan would UNLEASH the entrepreneurial spirit in this nation and bring manufacturing back to the US. Our corporate tax is at 35%, highest in the industrialized world. What do you think will happen when it's dropped from 35% to 9%, and they don't have to pay millions to lobbyists to get loopholes, which won't exist? Not to mention, the stability of a tax that takes 2/3rds of Congress to increase?

[Erasmus]

That's because it's NOT a 30% sales tax. This is a tax that replaces all federal taxes. It's at 23% and would be by law. I don't give a damn what your state sales tax is; take it up with them. This is a replacement for payroll, income, corporate, capital gains, and estate taxes. There is also a 22% embedded corporate tax on every good you purchase, which will be removed. People will wind up paying between 1-2% over what they're paying now for goods while keeping their entire paycheck, minus what your state takes. Don't conflate state and federal and don't tell me I should be ashamed because you're too ignorant to do your own ****in' research on the matter. Have you read the book? Either of'em? How about the condensed version, "Answering the critics"? That seems to be right up your ally.

The bill is also authored to where it won't take effect until 1 day after the 16th Amendment is repealed. It also comes with a prebate up to the poverty level, about 150 per month per person.  

Not to pick a fight, but it is a 30% tax.  Sorry.  Do the simple math.  Buy something for $1.00 and it will cost you $1.30.  If they want to do the math and involve the other savings as selling points, I'm fine with that.  Just stop calling it a 23% tax, because it simply isn't one.  Call it what it is, a 30% sales tax with the following benefits, and list the savings.  That would actually be honest.

And I don't recall saying anything about my state sales tax rate.

[Rebel]

This corporate tax you mention, that's embedded in goods and services - where is it written that this tax will just "go away"?

Sorry about that getting "hot under the collar", and I wanted to discuss this in a civil manner, but when someone tells me I should be ashamed of something I've been supporting, AND STUDYING, Erasmus, for years, I get pissed.

As for your question, the market. It happened once before between a few airlines. When that liability is removed, a liability they pass on to the consumer, a company's CEO or owner would be a FOOL not to lower it and pass those savings on to a consumer. Why? Well, if they don't, you can bet your ass their competitor will. It's all about gaining marketshare. Making money isn't the only goal of a company, it's about stability and staying power. They damn sure don't want to ruin any foothold in a market and will use anything to their advantage to gain more marketshare.

[Erasmus]

Sorry about that getting "hot under the collar", and I wanted to discuss this in a civil manner, but when someone tells me I should be ashamed of something I've been supporting, AND STUDYING, Erasmus, for years, I get pissed.

As for your question, the market. It happened once before between a few airlines. When that liability is removed, a liability they pass on to the consumer, a company's CEO or owner would be a FOOL not to lower it and pass those savings on to a consumer. Why? Well, if they don't, you can bet your ass their competitor will. It's all about gaining marketshare. Making money isn't the only goal of a company, it's about stability and staying power. They damn sure don't want to ruin any foothold in a market and will use anything to their advantage to gain more marketshare.

I've studied it, too.  And it's a 30% tax.  The math is pretty straightforward.

[Rebel]

Not to pick a fight, but it is a 30% tax.  Sorry.  Do the simple math.  Buy something for $1.00 and it will cost you $1.30.  If they want to do the math and involve the other savings as selling points, I'm fine with that.  Just stop calling it a 23% tax, because it simply isn't one.  Call it what it is, a 30% sales tax with the following benefits, and list the savings.  That would actually be honest.

And I don't recall saying anything about my state sales tax rate.

Where the hell are you getting 30%? The people making that dumbass claim are adding in a state tax.

Link to it.

...waiting...

[Rebel]

I've studied it, too.  And it's a 30% tax.  The math is pretty straightforward.

Yeah, I SERIOUSLY doubt that.

Now link to it. Post your proof. This isn't DU. If you make a claim, back that shit up, B.

[Erasmus]

Where the hell are you getting 30%? The people making that dumbass claim are adding in a state tax.

Link to it.

...waiting...

Nope.  I'm not including any state sales tax.  I thought you had studied this?  If you buy something for $1.00, it will cost you $1.30 under the Fair Tax Plan (at least the latest version that I read at their web site, which admittedly was a few months ago).  They arrive at the 23% number by dividing the $0.30 by the $1.30.

0.30/1.30=23%.  But the total tax is still 30% of the original price of the purchase, similar to how most people think about and calculate sales taxes.

[Rebel]

Not to pick a fight, but it is a 30% tax.  Sorry.  Do the simple math.  Buy something for $1.00 and it will cost you $1.30.  If they want to do the math and involve the other savings as selling points, I'm fine with that.  Just stop calling it a 23% tax, because it simply isn't one.  Call it what it is, a 30% sales tax with the following benefits, and list the savings.  That would actually be honest.

No, that's tard math. Something that costs you a dollar today, has a 22% embedded tax. Removing that, it'll be 78 cents. Adding the 23% Fair Tax, it'll be $1.01.

How can that work? Because you increase your tax base from about 60 million to about 330 million. That's how.

[Eupher]

Sorry about that getting "hot under the collar", and I wanted to discuss this in a civil manner, but when someone tells me I should be ashamed of something I've been supporting, AND STUDYING, Erasmus, for years, I get pissed.

As for your question, the market. It happened once before between a few airlines. When that liability is removed, a liability they pass on to the consumer, a company's CEO or owner would be a FOOL not to lower it and pass those savings on to a consumer. Why? Well, if they don't, you can bet your ass their competitor will. It's all about gaining marketshare. Making money isn't the only goal of a company, it's about stability and staying power. They damn sure don't want to ruin any foothold in a market and will use anything to their advantage to gain more marketshare.

Okay, I just wanted to be clear on that. For the record, I happen to believe in the market and the forces of supply and demand. There's probably an economic model that can predict this type of behavior -- I'll need to dig to see what that might be. Of course, there are examples of corporations and companies passing on savings to their customers, while bolstering stock prices and investors' interests, but I'm trying to gauge behavior here.

[Erasmus]

Yeah, I SERIOUSLY doubt that.

Now link to it. Post your proof. This isn't DU. If you make a claim, back that shit up, B.

This is their page discussing in part what a tax-inclusive rate is.  I really was goingt to give you the benefit of the doubt, but if you'd studied this, you'd know this already.
http://www.fairtax.org/site/News2?news_iv_ctrl=1541&page=NewsArticle&id=8248

[Rebel]

http://www.fairtax.org/site/PageServer?pagename=about_main


I see "someone" believes the Annenberg-funded and completely left-leaning Factcheck.org.

[Rebel]

This is their page discussing in part what a tax-inclusive rate is.  I really was goingt to give you the benefit of the doubt, but if you'd studied this, you'd know this already.
http://www.fairtax.org/site/News2?news_iv_ctrl=1541&page=NewsArticle&id=8248

You typed in Fair Tax and 30% and posted their link that shows them disproving the 30%, you realize that, right?

http://www.fairtax.org/PDF/Tax%20Notes%20article%20on%20FT%20rate.pdf

The Fair Tax Act of 2005 (H.R. 25 and S. 25), would
replace most existing federal taxes with a comprehensive
consumption tax in the form of a national retail sales tax
levied at a tax-inclusive rate of 23 percent, effective
January 1, 2007. The act would repeal the federal income
tax (including the capital gains tax and the alternative
minimum tax), the corporate income tax, federal payroll
taxes, the self-employment tax, and the estate and gift
tax. The act is intended to be revenue neutral.

[Eupher]

...and this plan would UNLEASH the entrepreneurial spirit in this nation and bring manufacturing back to the US. Our corporate tax is at 35%, highest in the industrialized world. What do you think will happen when it's dropped from 35% to 9%, and they don't have to pay millions to lobbyists to get loopholes, which won't exist? Not to mention, the stability of a tax that takes 2/3rds of Congress to increase?

I absolutely agree that the 35% corporate tax rate is obscene and that it's hobbling our ability to be and stay competitive.

I'm just not so sure that manufacturing jobs are really what we need back in the U.S., unless the economics make it feasible to do so -- and I'm not convinced of that.

Manufacturing is almost -- not quite, but almost -- a thing of the past. Instead of manufacturing, we produce services, ideas, and intellectual property. And we do pretty well at that, comparatively speaking. While manufacturing will never be dead, we shouldn't necessarily look at manufacturing gigs as some sort of benchmark. Let's look at what brings money in.

[DumbAss Tanker]

Now that you're hot under the collar, Reb, it's probably a good time to ask the question:

This corporate tax you mention, that's embedded in goods and services - where is it written that this tax will just "go away"?

That's the problem with calling 9-9-9 horrible and Fair Tax good, they are both equally changeable as Congress wishes.  Saying it's "By law" doesn't mean anything, since both would be laws and therefore both can be changed with equal ease by subsequent laws.

As far as 9-9-9 or any other alternative tax plan goes, neither Cain nor anyone else who gets elected can do more than propose the plan once they're in office, all they can do is ask Congress to turn it into legislation and pass it, after that it's a crapshoot.

I salute Cain for HAVING a plan at all, and having the guts to advocate for it, even if I'm not necessarily nuts about it myself (Though it probably wouldn't change my total tax bill that much one way or the other), which greatly distinguishes him from the rest of the pack (I don't include Ron Paul in that as I just don't see him getting into the finals).

[Erasmus]

No, that's tard math. Something that costs you a dollar today, has a 22% embedded tax. Removing that, it'll be 78 cents. Adding the 23% Fair Tax, it'll be $1.01.

How can that work? Because you increase your tax base from about 60 million to about 330 million. That's how.

As I said, if you want to advertise the benefits and savings of removing additional taxes, do it.  But call it what it is.  Even in your example, I'm still paying 30% in taxes on top of the purchase price of the item.  What they should be saying is that they are replacing corporate income taxes, personal income taxes, and the estate and gift tax with a 30% national sales tax.  Because that's what it is.  The incremental change in the purchase price may or may not make it less than 30%.  Lots of corporations have a very low effective tax rate.  You'd have to know for each product precisely what percentage of corporate income taxes were being passed through before you could accurately tell, and people buy thousands of products a year from thousands of different companies.  Your example is too high level to be realistic on every single purchase.  GE didn't pay income taxes.  Can't I assume that when I buy a GE product that I'm not paying any corporate income taxes on my purchase?  Further, by eliminating the payroll tax, it's not entirely clear that prices would fall, especially if companies let the employees have much of this benefit.  There's just know way of knowing this for every product I purchase.  The 22% embedded tax might be the national average, and mine might be 30% or 10%.  We have no way of knowing.