9-9-9 Will Raise My Taxes – Check your W2’s
Have you taken a few minutes to sit down with your 2010 federal tax return and W2’s to see how you’d fare under Herman Cain’s 9-9-9 plan? I did that today and was not thrilled by what I found.
First, let me explain that I consider our family to be somewhere in the middle class range. We are a single income family with a very comfortable 3-bedroom, 2.5 bath home in a rural/suburban area with decent schools. All our cars are paid for, and though they all have 200K+ miles on them, they get us where we need to go. We don’t take a vacation every year and I often shop at discount and thrift stores to save money. We have a son who is a sophomore in college, who wouldn’t be there without a generous academic scholarship. My husband and I have been taxpayers in Ohio and the U.S. since before we were married 23 years ago. We also pay taxes to our township (property taxes and a 1% school tax) and exorbitant taxes to the Marxist City of Cleveland, where my husband works. And we give a good percentage of our income to our church and various charities, several that help the underprivileged. I say this not to boast, but to say that I consider our family to be the typical American family that is paying our “fair share.“
So I was surprised to find out that Herman Cain thinks we need to pay more. Cain’s plan calls for a simple 9% income tax – “gross income less charitable deductions.” While we would actually pay less in overall federal taxes under Cain’s 9% because the Social Security and Medicare withholding would be eliminated, it would only be $1344 less.
That means only $1344 left to cover the 9% national sales tax. That would take care of the first $13,000 of our consumption, or around $300/week, but anything we spend over and above $300/week would effectively be a tax increase for our family. Considering that we spend around $100/week+ for gas and $150/week for groceries, I can say with a fair amount of confidence that our taxes will be going up under Cain’s plan.
Of course, the plan’s supporters predict that the cost of goods will go down (eventually) because of the trickle-down effect of the reduced corporate tax, but even Cain’s website is cautious about making that claim:
“By replacing higher marginal rates in the production process with lower marginal rates, marginal production costs actually decline, which will lead to prices being the same or lower, not higher.” [emphasis added]
While I think some aspects of Cain’s plan are good (reducing the corporate tax and making everyone pay something), raising taxes on the middle class would be disastrous. It would cause families like ours to further reduce their already stretched budgets and cut back on spending, further depressing the economy. In our family, that would mean going out to eat less, taking fewer vacations, shopping at second-hand stores more and repairing things rather than replacing them. While prices may stay the same or even be lower in a post-9-9-9 economy, middle class families will have less disposable income, further straining the flailing economy.
Cross-posted at What to Read Today