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9-9-9 Will Raise My Taxes – Check your W2′s

By: Paula Bolyard (Diary)  |  October 24th, 2011 at 04:05 PM  | 

RESIZE: AAA

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

COMMENTS

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  • Vaughn Harold

    needed in the tax code, not deductions, exemptions, or progressive rates.

    You also make the assumption that incomes want be raised, as well, to offset the sales tax

    • powertothepeople

      will raise salaries just to pay for their employees new sales tax, you live in a world of fantasy that would be fun to visit.

      Tell me, how much on average have the salaries gone up due to the generous nature of employers to cover the massive rise in living cost over the last 6 years? Employers as a general rule do not raise salaries just because of tax increases nor because of an increase in their own profit.

      • Vaughn Harold

        when your employees all know that the business tax rate went 35% to 9% and sales taxes went from 0% to 9%..

        • powertothepeople

          Lets assume the tax rate does go down that much, according to Cain and most of his followers, the savings would be reflected in lower priced product which by the way is also a fantasy world belief.

          The reality of any saving in taxes will not directly benefit the employee or the consumer. What will happen is the companies will take the new found cash flow and invest. They will put more into saving, more into upgrades, research, and so on. The benefit will be long term for the economy, but the employee will not see much of it personally.

          So it is a fantasy world belief to think people should not care if their taxes are raised because they will get a raise. Will not happen as a general rule.

      • Craigpennsylvania

        Mr. People, business owners are not in business to cover what you deem massive rises in living costs.

        Business owners have to survive in the real world. This means they have to pay all the various taxes that the federal govt. demands while also staying competitive with other businesses.

        We don’t give pay increases to be generous. We pay higher wages for good employees based on what is needed to keep those good employees.

        I own an auto dealership. When hiring anyone from office staff to sales people to mechanics, I know that if I don’t pay enough, the dealer up the street from me will be able to take my people from me.

        Let’s look at a specific example: Let’s take a mechanic making $60,000 per year. He is a good mechanic. Dealers LOVE hiring good mechanics.

        Any tax plan that eliminates payroll taxes will lower my hidden costs in having this employee. The FICA taxes alone for this person are $4590 per year.

        Under 999, The Fair Tax or most flat taxes I have seen, this $4590 expense would be eliminated.

        That mechanic, under today’s system, costs me $64,590 in order to pay him $60,000.

        If you think that I won’t have to, as an employer wotking in a competitive environment, pay him the $64,590, you are just plain flat out WRONG.

        I would lose every good employee, as my competition would gladly give him that tax money to get him working there.

        That is Business 101, Mr. People.

        • Vaughn Harold

          n.t

        • powertothepeople

          that you claim to own a business and yet have such poor reading comprehension. Maybe you should try to follow the path of the conversation instead of running your mouth about one comment you happen to catch late into the conversation. But since it seems you are a moron, let me try to simplify the conversation for you so that you never again make yourself look so stupid,

          Harold makes the claim that while the new tax code may raise your taxes, employers will most likely pass their savings onto all employees because they want to cover the raised taxes of their employees.

          I responded BS. Does not happen.

          Then you went on some moronic tirade.

          Simple enough for you?

          Then you go on to claim that somehow you will have to pay more to employees just to keep them should a tax increase happen? Sir, if you own a business I would be very surprised. Not only is that not true, the fact you claim that other businesses will somehow poach your employees should you not increase their wages just based on your savings is again quite the stupid comment. Business 101 has nothing to do with what Harold claimed or your claims that somehow the savings that a company would maybe gain under the Cain plan would have to be passed on the employee. In fact, that claim is not in any business class outside of some communal hippie business class that wants everyone to own others things.

          • Craigpennsylvania

            It will be up to those who read what I typed and then your response to decide who understand what happens in a real business.

            For the record, though, I never mentioned that I would have to pay people more due to a tax increase. I did mention that I would have to pay more to keep good employees should the payroll tax be eliminated under any of the tax reforms. This would be a tax DECREASE for my business. I would have to pay more to keep good employees. It’s called the free market.

            Have a wonderful rest of your day. :)

          • powertothepeople

            but you jumped into a conversation where the original poster did state that very thing and I said that is not how things work.

            And again, payroll taxes being eliminated will not cause employers to raise salaries. Will some do it, yes. But as a general rule, no. They will take those savings which is their money and put it back into the company. That sir, is business 101.

            Salaries are dictated by the area market and company ability to pay, not lowered taxes. Any savings or profit a company makes goes to further the company or offset other costs, it does not generally go to employee salaries just to give them a raise.

            What you need to do is go back to the original thread and direct your responses to the appropriate person. And then you need to take your internet claims of business ownership and know all about business and shove them. To claim that somehow a savings in payroll taxes will cause employees to pass those saving off to the employee via a pay increase is not reality in any world.

          • Craigpennsylvania

            Some friendly advice: Calling someone a “moron” and telling the same person to take his claims and “shove them” is not how adults should behave.

            If the moderators of Redstate would like to have proof of my business interests, I will be happy to oblige. I personally have to hire and sometimes fire people as a part of running my businesses. ‘

            You don’t think employers will need to pay more to employees should the payroll tax be eliminated. Let us try this another way. Currently, an employer has to pay 7.65% of the employee’s payroll in the form of FICA taxes.

            Let us say this tax was increased to 20 %. Do you think the employer would be able to afford to keep paying all his/her employees the same salary/hourly wage that each is getting today?

          • powertothepeople

            I could care less what you own, run, or do not own. It is immaterial.

            And you are a moron, period. You come to a thread started by a guy who states an increase in taxes should not bother us because our employer will offset the rise in taxes with an increase in salary. This statement from him is nonsense and that is what I expressed to him. The question you seemed to have so many issues with was simply a statement that when in the past, as a general rule, has a company went to their employees and given them raises based on a rise in their cost of living? And since a rise in tax liability is a cost of living issue, the same would apply.

            Then you went on to state ignorantly that I must have never owned a business because you think if you save a few bucks on matching payments of taxes for employees, somehow that will mean business will have to give those savings to the employee in order to keep them. This may happen in a very small percent of companies, but it is not what will happen in most companies and for you to claim otherwise demonstrates just how much of a moron you are.

            Employers are not in the business of paying for cost of living increases whether that be gas cost or higher taxes. I could care less what you own or do not own, for you to state otherwise is pure stupidity.

            The taxes payments companies make for each employee is made from their money. If somehow those payments were ended, the company will put that money back into their bottom line and use it to grow the company which in turn creates more jobs. Some companies may pass those savings on to the employee, but that will not be the normal action. Some companies may use these savings to attract top people to their company by promising them the savings will go to their pocket, but that will not be the norm.

            You should really watch you own mouth before whining about a persons response. You made the first attack and I am more than willing to play the insult game. And you should really learn more about business 101 as you put it prior to trying to state another person has no clue. And most importantly, you should really gain some reading comprehension skills so that you do not look like a fool.

            Now you have a good day…………..

          • powertothepeople

            again, immaterial. But just for kicks and giggles lets assume we all saw a 20% tax increase.

            The answer to your question would be no, companies as a general rule would not raise their employees salaries by 20% or even 10%. since it is a hypothetical and we can not know what would happen, it is only a guess, but my guess would be..

            If taxes went up that much, one could safely assume the companies tax liability went way up as well. If this is the case, people would be losing their jobs, tons of people.

            If somehow companies avoided the increase, you would probably see some increases in pay, but nothing near 20% or even 10% and to compensate for this loss of revenue, many jobs would be lost.

            But what would more than likely happen is most would see small or insignificant increases in their salary and would simply have to find ways to make ends meet. If companies were able to save money from not having to pay tax liabilities for employees, some would give a pay increase but it would not be significant and would mirror a merit increase of 1-5 %. So the tax increase would be the problem of the employee.

          • Craigpennsylvania

            Mr. People, an increase in payroll taxes from 7.65% to 20% is not a 10 or 20 % increase. It is a 161% increase in payroll taxes.

            An increase in payroll taxes would have the net effect of lowering the wages being paid to employees while the lowering or eliminating of payroll taxes would have the net effect of seeing wages go up.

            I was posting each and every time in response to YOUR own words, Mr. People. YOU don’t think lowering payroll taxes that businesses have to pay will result in people getting higher wages. This means you think that employers don’t have to compete with other employers for qualified employees.

            You also don’t think that lowering taxes on businesses will result in companies lowering prices.

            Let’s take two businesses with two different tax structures.

            Business “A” has no payroll tax to pay.

            Business “B” has to pay a 7.65% tax on its employees in the form of payroll tax.

            Both companies make the same product, which has a raw materials, rent and other costs of $100 per unit and each sells 1000 units per month at $200 per unit. The only expense not factored into the $100 per unit cost is the total cost of the employees.

            This leaves a gross profit margin before labor costs of $100,000.

            Both companies have 15 production employees averaging $5000 per month and 2 employees in the office making $4000 per month.

            Each has one sales rep making $6000 per month and one executive making $8000 per month.

            The payroll cost for company “A” is $97,000. This leave “A” with $3000 in profit. This is a net 1.5% profit against total sales

            The payroll cost on company “B” is $104,421 with payroll taxes. This is a net 2.2 percent loss against total sales.

            Company “B” will eventually have to shut its doors unless it either cuts wages or increases prices. If it increases prices, then its customers will have to go to company “A” to buy products.

            Therefore, company “B” will have to lower wages.

            In order to just break even, it will have to cut wages across the board by 4.6%.

            The production employee would now be making $4780 per month, and the sales person $5736 per month. Eventually, company “A” will be able to expand and take the employees of company “B”.

            The same effect will occur should we see the elimination of payroll taxes for all companies.

            Taking the above scenario into account, let’s say both companies had that payroll of $97,000 but each was selling its products for $210 per unit.

            Under current law, each would have $210,000 in sales, and a net payroll of $97,000 plus $7421 in payroll taxes, for the total of $104,421.

            Both would have a net profit of $5579, or 2.7 % of its gross sales of $210,000.

            If both had its payroll taxes eliminated, it is your position that the company would “keep” this money in the form of profit.

            Let’s say company “A”, under this circumstance, did the following:

            It lowered its price to $205 per unit and offered each employee $100 more per month.

            It would have gross sales of $205,000 and a total payroll of $98,900 after paying the increase in wages, for a profit of $6100, or 3% of gross sales.

            Company “B” did as you suggested, and kept paying the current wage and charging $210 per unit, making $13,000 in total profit.

            Customers will look at the $205 price for company “A” vs. $210 for company “B” and company “A” will see a dramatic increase in its sales volume.

            Company “B”‘s employees will learn that “A” is paying more, and elect to go to work at “A”.

            Before long, “A” will have all the sales and all the employees unless “B” changes its pricing policies and what it pays employees.

            This is nothing more than human nature, Mr. People.

            I don’t expect anyone to care about my owning a business other than to give those reading this a reference point. If this was a discussion of the effect of the federal government on doctors, I would be interested in what a doctor had to say.

            A business owner, by nature of his daily life, understands what the effect of government policies is on a business. I merely stated my reference point, Mr. People. If this does not matter to you, that’s ok. It just might to others. :)

          • powertothepeople

            has zero relevance to the original comment, none.

            And there are a few things I do not do in life and beating my head against a wall is one of them. I will again simply state, that an end to taxes paid due to an employee will not cause an increase to their pay.

            You are trying to play word games to justify your claim. I clearly stated that salaries are reflective decided by market and employer ability to pay. But a market is not going to go up just because the government ends certain taxes paid by a company. To attempt to state that Cain and the original poster is correct that we should not care if our taxes go up because with company taxes will go down and then they will raise our pay is ludicrous and not backed by history. All the company A will lower prices and pay more versus nonsense does not hold water. Companies do not give away new profit nor do they just lower their prices across the board just because their tax liability is down. Are you going to lower the price of your cars just because you pay a smaller tax liability in employees, hell no. And if you do, you will be in the very small minority. When companies make more money, they save it, invest it, hence growing their capitol and business. They do not pass out pay raises.

            Now, I am done with you because I do not argue with stupid people who continually act stupid. Your arguments hold no merit, you know it, I know it, and every reasonable person who has read this thread knows it. I am moving on to other subjects where people actually know what they are talking about.

            PS. No one on this site cares what you own or what you do not own. And in fact, I would tend to believe your arrogant thought that only you know about business because you claim to own one would cause them to care even less. It does not take a business ownership to know simply fact and after reading your nonsense, the statement is even more poignant.

          • congressworksforus

            You couldn’t be more wrong on this. I suggest you call it quits before you make yourself look even more foolish…

          • The_Gadfly

            the business sections of the local fish wrappers either. This Christmas season its going to be all about the price of goods, no competition on service or quality.

            And missed the whole “no personal attacks” thing with his “moron” comment in the first post.

          • powertothepeople

            not like what I said, report it and sit back and wait for a reply. Stupid people making stupid comments deserve contempt. You are part of the group as well since the best you could bring to the conversation was stupidity as well.

            Same applies to you Cainbot, show me demonstrable proof that companies will compensate their employees for the increase in taxes they have to deal with?

            Until then, which by that I mean you will never be able to do it, stay in stupid land and keep the stupidity to yourself. The above posters could not afford any more stupid being dumped on their already moronic claims.

            I made this response special just for you so that you can copy and past it in your complaint to the site.

          • The_Gadfly

            Me I can take as well as I hit, and I can hit pretty hard. But you’ve abused people who were making rational arguments. With no equivalent experiential basis you’ve called two successful business people idiots. So the moderators have been contacted.

          • powertothepeople

            has no place in adult conversation nor has anything of substance to add.

            Now Cainbot, if you or any of the other idiots on this thread can show me demonstrable fact that as a general rule companies will just generously increase salaries all because their employees had their taxes raised, I will concede.

            Until then, you are simply idiots pandering to to stupidity.

          • voltron

            I hire people for a living. What he describes is exactly what would happen.

          • Vaughn Harold

            Every time minimum wage is increased employers are forced to raise wages.

            Not sure what kind of business background you have, but it sounds like you work for large firms. Small businesses opporate just like what has been stated.

          • Joshua Persons

            I have to say, powertothepeople, after reading your tirade here you’re going on my personal Hinz rule list. You really lost it here, and if this is how you address people who disagree with you, it’s not worth starting a dialogue.

  • http://whattoreadtoday.blogspot.com/ Paula

    Mike Gamecock said, “We need tax reform for the nation’s good. Is the only test if it raises Paula’s taxes?

    Yes. : ) Ahem.

    That’s a legitimate (and fair) question. As powertothepeople said, I feel like I”m already being bled dry. We’ve got “fees” (glorified taxes) out the kazoo on everything from our cable TV bill to our cell phone. Our healthcare costs have gone up due to Obamacare’s mandates and our local taxes continue to rise, in part because of federal education mandates.

    So let’s start with the premise that 9% will not be 9%. While Cain is rolling back “hidden taxes” via the corporate income tax reduction, who knows if/when the myriad of federally mandated fees would ever go away. All that to say we will be taxed more than 9+9 from the get-go.

    Moreover, we have a government with out-of-control, unrestrained spending. To what extent should I be compelled to continue to feed this beast when a majority is paying nothing, has no skin in the game and continues to vote in legislators who foolishly squander my hard-earned money? If the federal government were scaled back to the Constitutionally-mandated proportions intended for it, there would be no need for 9-9-9. There was certainly no need for that much for the first 150 years of this country’s existence.

    Mike also said, “How much should Paula be willing to pay, if anything, for jobs creation and economic growth-inducing tax reform?

    Also a fair question and my answer is “zero” for jobs creation – it’s not the role of the government to create jobs. The “economic growth-inducing tax reform” is, I think, a separate issue. Arguably, if you eliminated federal income taxes completely, there would be economic growth. I’m not advocating that, just making the point that economic growth is affected by tax policy.

    On a more practical level, be sure that if Cain is the candidate, Team Obama will have a 9-9-9 calculator on their website and will run ads showing how much more a family of four making “X/year” will pay under Cain’s plan.

    • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

      Do you oppose any tax reform that raises anyone’s taxes? Simple.

      I do not insist that any tax plan not raise anyone’s taxes, because given that we now spend 40% more than we take in in tax receipts and so can’t balance the budget, any reform plan would need to be at least revenue neutral, which would mean that some people’s taxes would go up and others down.

      But I could respect those that insist that no one’s taxes go up, even if that means less revenue…if they would admit that at least the third time its asked.

      • http://whattoreadtoday.blogspot.com/ Paula

        The answer is not to raise taxes. The answer is to drastically slash spending. It’s getting to be a cliche, but it’s true, nonetheless, we don’t have a revenue problem, we have a spending problem.

        Raising taxes on the middle class in a recession would be disastrous.

        • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

          a net good especially given the expected econ growth and especially given that we spend 40% more than we get in tax receipts and how long it will take to close that gap.

          It seems to me that we could do it your way and actually raise much more in revenues and so never need to raise taxes. Maybe Perry’s Flat Tax would do that. I know Cain’s would, which is why I’m willing to allow for mine and others to rise for a time as others fall. The net would be good for the country. But we could also lower rates further under 9-9-9 as revenues go up.

          But I do like that Perry’s option allows for all to choose. That can’t be done with a sales tax as part of the mix.

          • mikefrey

            on the 50% that don’t pay them!

            For the sake of argument we can say the whole system needs to be revenue neutral (or lower as I’d like to see as we cut spending), but even in a neutral environment, I think it is necessary for all to “have skin in the game”.

            Since I believe in free enterprise, I argue that even the workers who go from 0 taxes to some will be better off as the markets open up, hiring begins, competitive bidding for labor finds a new equilibrium.

            Mike

          • mikefrey

            on the 50% that don’t pay them!

            For the sake of argument we can say the whole system needs to be revenue neutral (or lower as I’d like to see as we cut spending), but even in a neutral environment, I think it is necessary for all to “have skin in the game”.

            Since I believe in free enterprise, I argue that even the workers who go from 0 taxes to some will be better off as the markets open up, hiring begins, competitive bidding for labor finds a new equilibrium.

            Mike

        • BA Cyclone

          It is true to a large extent that our fiscal policy is in serious despair, primarily due to what you say — we are spending far too much.

          However I believe you are mixing criticisms. Tax reform isn’t about raising more taxes, it’s about simplifying the tax code and making it more competitive in the global marketplace.

          So to your point above about “government doesn’t create jobs”; well that is a valid criticism of course, but completely misplaced. A government absolutely does or does not create an environment that fosters job creation.

          One could reasonably argue that a tax structure that is ridiculously burdensome (regulations, taxes, combinations of both) on potential or existing job creators and investors is not exactly a recipe for the creation of wealth. Creation of wealth nets prosperity, prosperity nets events that generate tax revenues.

          Thus tax reform per se’ isn’t really about raising any person’s taxes (unless you are a statist), although individually this may happen in specific cases. Tax reform here is about raising total tax revenues, which is frankly very different. Liberals often treat these simplistically with a direct relationship (i.e. raise taxes = raise revenues) although the truth is far more complex.

          Which is a long response to say that I think your criticism is healthy, but misplaced on several levels. Tax reform is absolutely necessary for competitiveness and job creation, which is why Herman Cain is proposing it. He is a business guy and he knows it is needed if we are to have a more free, vibrant economy.

          Reforming the tax system in an appreciable and legitimate way will, in fact, also make it less progressive. This is only fair, because the United States has the most progressive tax structure in the OECD (free world), and frankly I find that ridiculous and immoral.

          The tax code should not be a structural means for wealth redistribution.

          We can surely talk about cutting spending — and Herman Cain was talking about that months ago, and is happy to talk about it — but that is really a totally different topic altogether, to be honest.

          The sad truth is that the United States has BOTH problems — our fiscal spending is in a pitiful state, and our tax structure is ridiculously pathetic and uncompetitive. The two ARE related, albeit not directly, and I think it’s apparent we need to fix both.

          • SoFiMil

            .

    • http://dreamsfrommyforefathers.com RoguePolitics

      I am one who can say without a doubt Cain’s plan would SAVE me a lot of money on taxes.

      My net effective tax rate is about 30%..
      Most of it is “S” Corp earnings and so I would go from 30% to 9%. Add what I would pay in sales tax. This isn’t 9% of the total because I spend less than half what I earn so maybe 4% on income. I do get hit with capital gains every few years on one investment or another so maybe add another few percent to cover that and I would likely stay under 15% average on total earnings.

      I would probably save $50K a year in taxes.

      I am still opposed.

      First, I think this is a sucker bet. I might save that much in the first year or three but then rates would get jacked and I would most likely be worse off.

      Second, I don’t believe taxes are the primary reason the economy is so far in the tank. I think the uncertainty of having a communist rat bastard in the white house is the primary problem with the economy. Followed closely by the regulatory environment created by federal, state and local decrees that throw up a wall for folks considering opening a new business.

      But by all means I think everybody should take a stingy self interested view of 999 and ask why it is that we instead of Washington are expected to take the hit.

      Why is it important for 999 to be revenue neutral instead of cutting the overall tax burden on Americans by significant numbers and cutting the budget to match the new reality?

      Cain has the establishment flaw of wanting to fix Washington instead of closing as much of it down as possible.

      • http://whattoreadtoday.blogspot.com/ Paula

        is exactly the direction we need to go.

        I talked to a business owner last weekend with 49 employees. He said he will not go to 50 employees because of the huge increase in costs and regulations when you hit the magic number of 50 employees. It’s not worth the the hassle. And I think I mentioned this earlier in the thread that all the fees we pay to do nearly everything in life amount to a hidden tax. Therefore one could argue that “taxes” are indeed a reason the economy is in the tank. Getting rid of the massive administrative state would effectively be a tax cut on businesses.

        • GregInFla

          Just curious. Could he start another company, same as the first, and hire up to 49 employees there? I want the prospective 50th employee to be told why he/she is not hired, and for that person to file a lawsuit against the IRS. That would expose this crock of regulations that we have.

          • http://dreamsfrommyforefathers.com RoguePolitics

            Overlapping ownership or control of businesses causes the person involved to treat them as one business when it comes to complying with regulations. Particularly when it comes to taxes or employee benefits.

      • BA Cyclone

        Why is it important for 999 to be revenue neutral instead of cutting the overall tax burden on Americans by significant numbers and cutting the budget to match the new reality?

        In case you haven’t noticed, we have a present public debt of nearly $15 TRILLION. It’s pretty apparent that the “tax burden” we have been living within has been much less than the government services we have been enjoying.

        The need for “cutting the budget” goes without saying. It is the opening bid. It is understood on our side of the aisle. We don’t accept that the government can keep spending more than it takes in, and Herman Cain is one who has talked about this for months already.

        Making the proposal “revenue neutral” is a nod to keep a particular tax reform plan as fiscally moderate — not changing what the government takes in (short term) and couching it as a reform bill. This is keeping apples and oranges separate. Tax reform is for tax reform. The quiet truth is, of course is if you reform taxes properly the fiscal reform will happen later all on its own.

        Cain has the establishment flaw of wanting to fix Washington instead of closing as much of it down as possible.

        Again, you really need to pay attention to what Cain has said on these topics, repeatedly.

        Namely: “horizontal cuts, and vertical cuts”

        Herman Cain’s entire biography and life experience are totally the opposite of an “establishment” variety.

        Herman Cain’s experience, however is in the business realm and he fully recognizes the full need for the tax code to be restructured to regain a competitive edge in the business climate that the tax structure creates. His interest with the proposal has as much to do with making the tax structure fairer, if not far more to do with creating a tax structure that makes it simpler and easier for wealth to be created in THIS country.

        Fixing the fiscal crisis in this country cannot be done by merely cutting government — although I’d certainly support serious and drastic cuts myself. The political reality is that to uphold the civil society we need to have economic growth and wealth creation at the same time.

        • BA Cyclone

          I totally messed up the blockquotes on the second one, sorry about that.

          • lineholder

            http://www.nerds4cain.com/Blog/archives/723

        • http://dreamsfrommyforefathers.com RoguePolitics

          He was criticizing Paul’s plan to end several agencies like Dept of Ed, Dept of Energy, etc.

          Whatever you think of Paul there are whole agencies, these among them, that need to go away. Cain said he wanted to fix them instead.

          • rightwingmom52

            in person twice and in other interviews state that there are agencies which need to be altered or abolished. Tag line is “We’ve got some altering and abolishing to do.” He specifically targeted the EPA and NEA in one speech I heard.

          • http://dreamsfrommyforefathers.com RoguePolitics

            I like Cain. But I think only absolutely dedicated and Seriously Massive reductions in Washington will save the country at this point.

            They have destroyed our country. At this point status quo or 5% -10% cuts, even if real, aren’t going to do it.

            I could support Cain in the general I haven’t decided in the primary who gets my support. Big and Bold will at least get my attention.

  • congressworksforus

    I can’t imagine for a second I’d be worse off given that I am self employed and I’m currently paying 15.3% in Social Security and Medicare alone…

    My ONLY concern about the Cain plan is the mortgage deduction, and for 2 reasons:

    1. People plan out for a long time when you take a 30 year mortgage. Anyone early in that term takes a big hit.

    2. Without the mortgage deduction, real estate prices will continue to fall.

    Now, #2 might be a good thing in the long run, but in the short run it *could* jeopardize any growth that the new tax plan will produce, which would be catastrophic because Cain’s plan (like everyone else’s plan) is based upon economic growth to close the deficit. (Except for Ron Paul and Gary Johnson who plan on balancing the budget with a machete…)

  • gator_hoo

    You may get a reduction on payroll tax from 15.3% to 9%, but that’s still taxed, and you can’t eliminate the payroll tax in your calculations. It is also unclear in Cain’s plan to what extent a corporation will be able to deduct losses.

    • JSobieski

      or something very similar to a VAT. In that context, a company losing money still pays taxes based on each transaction even if they are losing money overall.

  • kywrite

    We’re a military family; my husband’s E-6 income pays most of our expenses, and I fill in as much as I can freelance writing while caring for our two preschool children and two teens. Right now, our tax burden is negative – SERIOUSLY negative, as in we get back over $4000 we never put in. We agree that this is a load of crap.

    That means if we end up with the 9-9-9 plan, even with the most generous floor put in we will not get that nice little April bonus. And you know what? I’m good with that. The system is screwed up when taxpayers turn into tax beneficiaries. We have an enormous debt that I do not want to leave my sons and daughters to pay. Our country’s values and blessings are being lost beneath a crushing debt burden, and we are increasingly indenturing ourselves to countries who do not have our best interests at heart.

    For thirty plus years, politicians have promised to fix this debt imbalance. For thirty plus years, it has only gotten worse. My only requirement in our next president at this point is that he (or she) have a feasible plan to fix it as well as the proven ethic and ability to turn our country around. Right now, Cain fits that ticket for me better than anyone I can see out there. However, it won’t work for ANY potential president if we don’t also elect a slate of senators and representatives equally committed to turning our country around. We must remember that. We must also remember that this process will not be without pain.

    • daendda

      There’s plenty I like about a flat tax. While I can accept the flat tax as a way of removing deductions (save one) I strongly disagree with the level of taxation in 999 and Perry’s plan. As a military father, I can see giving up deductions for having kids and owning a house, but I can never accept the end of the combat service deduction (especially in time of war).

      Right now, even if we rolled back spending to the year 2000 levels, the federal government would be grossly overbudgeted into areas where it does not have Constitutional authority to spend. We could do without half of our cabinet positions and their associated bureaucracies. 10% is good enough for the church it should be good enough for our government. Again, thank you for all you and your husband do.

  • dskinner11

    Cain himself has admitted people’s taxes would go up which is why he complicated the plan by adding in 909. He also further complicates the plan with enterprise/opportunity zoes.

    The bottom line is middle income independents are going to do exactly what Herman Cain says they should do, run the numbers. When they do that, millions are going to discover that their taxes will be higher and that their rich uncle will pay drastically lower taxes.

    Unfortunately, the plan will prevent Cain from getting elected and it would prevent 70% of Congress from ever voting for it.

  • Doc Holliday

    you calculations ignore faster economic growth, enhanced productivity, a stronger dollar, etc. I am amazed by how so many are deathly afraid of a sales tax, but seem to ignore price inflation, the poor job outlook, and out of control debt.

    I have always believed the number of people who don’t like 999 is pretty much equal to the number of people who don’t want Cain to be our nominee.

    I have a plan too, it is to elect someone who conservatives respond to. I am not seeing that with Perry or Romney.

    • westbrook348

      how is that letting capitalism work better?

      999 helps the economy in theory. But I’m in the group that thinks it’s very dangerous to give congress yet another revenue stream.

  • williamjameson

    I thought personal attacks violated the rules.

    • GregInFla

      That Power guy has been absent for a bit. Things get taken care of quietly at times.

      • williamjameson

        more than once. PowertothePeople has done this repeatedly and the mods have failed to wane his behavior. I argued with this member once and received sort of a warning, more like a back off and I respected the heads up. I

        Its past time to treat all members equally and warn these hatemongers publicly. I doubt this person was warned privately but its apparent that mods are playing favorites.

        • gekster

          he was delt with.
          I havn’t seen him since then, but maybe he just took a personal time out.
          I’ve had to do that to myself a couple of times.

    • jakeofalltrades

      to mommy are noise. But the whiners often look less mature.

      • williamjameson

        It snot whining, its about one a-hole who appears to receive special treatment while the mods never seem to publicly admonish this character. They handle others the publicly and they should treat everyone the same. My opinion is this character runs away hoping everyone forgets. Better to humiliate him than ignore it. You look less mature taking sides with an obvious hatemonger. Congrats, you found your mommie and she’ll call you “stupid” too.

  • daendda

    I can’t support 999 or Perry’s Plan. I am a captain in the United States Army. My wife makes less than half what I make. And together over the past 5 years we have paid 2-6% in annual income tax liability filing jointly because I’m usually deployed to combat. I’m not including SS or Medicare because those taxes remain the same for me as they do everyone else.

    Under both plans my taxes and the taxes of every American serviceman will go up dramatically because of the loss of deductions for serving in a combat zone. I have not seen a plan for the deductions to continue so I can only conclude that while .45% of the US population is sacrificing their freedom’s for the rest of you there will be no deduction in blood squeezed from Soldiers in combat by our government, only increases.

    • 1bunny

      stay with the old or use the 20% flat tax, that is the beauty of his plan. Not forced to change. How about that, we get a choice. Novel concept for DC.

  • inwarresolution

    OK, from a practical perspective, you’ve seen the comments that prices will go down as firms’ costs go down, so you’ll have more money to afford the higher tax. I agree – it requires some trust.

    But from a philosophical perspective, I think conservatives should embrace a sales tax. It’s visible and not opaque like our current system (payroll + income). It captures tax avoiders, broadening the base, and it’s a voluntary tax. Conservatives should learn to love it. http://bit.ly/tdhg5V

    • westbrook348

      but only if it means abolishing the income tax and the IRS.

  • redmymind

    is a vote for Romney, and a vote for Romney is a vote for BHO. I don’t ever worry about Cain’s 9-9-9 plan or lose sleep over its senseless particulars because he’ll never become president.

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  • jrhode2873

    I did the same thing and my taxes would go down under 9-9-9 even if the price of goods does not go down AT ALL. I don’t know what your overall income tax rate is, but mine is about 15% so when you add in the S.S. and Medicare taxes, my overall yearly federal tax burden is around 22%. So my taxes would go down from 22% to 9% which would leave me and my family 13% of my income freed up to pay whatever the new sales tax is. I happen to think the price of goods will in fact go down somewhat especially over time which would make my tax burden go down even further when compared to the current tax code.

  • http://whattoreadtoday.blogspot.com/ Paula

    including Medicare and SS is 10.5% due partly to the fact that we have pre-tax income reductions including contributions to a medical flex spending account, health care plan, and 401K. We also use the mortgage interest and charitable deductions.

    So going to 9% would reduce our federal burden slightly, our overall burden would go up.

  • jrhode2873

    Yeah, I don’t think there is any disputing the fact that if you are only paying 10.5% in federal taxes (including S.S. and Medicare), you will pay more under 9-9-9 unless prices come down to the point where they remain the same as they are now even with the 9% sales tax. That price decrease is possible but not likely in the short-term. I do think you would benefit from 9-9-9 and a Cain presidency overall by a lot of other things like a growing economy that 9-9-9 would certainly generate along with free market healthcare reforms that Cain is pushing.

  • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

    Serious question.

  • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

    The Dems’ answer this question with class warfare to tax the rich. I have never known when the Dems didn’t want to do that.

    If we are going to remain conservative, and thus coherent, surely Paula and those similarly situated aren’t going to go that route.

    I must also say that I do think tax law changes must not unduly burden the poor in its net effect, of course, but also that the regressivity of a sales tax be ameliorated in some way.

    But any flat or FAIR tax will inevitably raise some taxes and lower others if it is to be revenue neutral.

    Therefore, what should be the test for conservatives for tax reform?

    How much should Paula be willing to pay, if anything, for jobs creation and economic growth-inducing tax reform?

  • Xasteius

    And Cain did say for everyone to do the math themselves.

  • powertothepeople

    we need a balanced budget and balanced budget amendment. You can change the tax system as many times as you want and until our politicians quite spending a buck fifty for every dollar brought in, change will be useless and will only be short term.

    But to answer your question, my taxes going up is a big deal to me. I am already bled dry by taxes on almost every aspect of my life. I do not need more taken away from me. The litmus test should be, or at least it is my litmus test is as follows. do they stop allowing 50% plus to avoid almost all taxes and do they lower the taxes on business. If they do this, they are taking giant steps in the right direction. But if those of us who have been paying the way for the 50+% see our taxes go up under any plan, it is the wrong plan.

  • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

    comment above, I think, where I pose the question for all conservatives re litmus tests for tax reform.

  • Vaughn Harold

    based on the premise of the current tax code. The only thing you can take from the current tax code is the following:

    Yearly Gross Pay – Yearly Pre-tax deductions – Yearly charitable contributions = taxable income (spendable income) * 9% = income tax owed.

  • http://whattoreadtoday.blogspot.com/ Paula

    You’re incorrect, Vaughn.

    Under Cain’s plan (see link to Cain’s website above), we will be taxed 9% of “gross income less charitable deductions.” No other deductions.

  • conservativeparrothead

    I dont pay social security, with mortgage interest, child care expenses, property tax, state tax deductions and credits like child credit. Our Fed Rate is in the 5% range. So my fed taxes go up.

    Everything I buy adds 9% onto it after a certain level, which wont be tough to hit in a family of four with groceries and other expenses. Gasoline? Youre gonna add 9% to the price of gasoline when its at 4.00 a gallon?

    If you take away mortgage deduction, Im affraid to see what that does to the housing market, plus I dont think its fair for those who were in the system, paid their income tax and now have the game changed on them with the sales tax.

    I like Herman Cain, respect his ideas, its just not gonna work for me, and I think it gets slaughtered in a general campaign. Plus, Im not sure he is articulate enough to sell it. We will find out, as I guess he and Newt are gonna do a Lincoln-Douglas debate.

  • http://whattoreadtoday.blogspot.com/ Paula

    In addition to gas taxes, we’ll see more taxes on hotels, restaurants, amusement parks and other attractions.

    If corporate taxes drop dramatically but taxes on a large percentage of Americans go up -minimally or moderately – the supply-side economics theory works for corporations and producers. However, average Americans won’t enjoy the benefits of this if their taxes continue to rise and they’re funding the government rather than pumping money into the economy.

  • sgtpanzer

    Here’s an idea I like better, almost as simple as a flat tax
    http://pastebin.com/sYQ5Htpx

  • tjms

    the items you refer to in your post going up with the sales tax, will affect me very much and not for vacations. We are independent truckers, not corp,etc, and the added sales tax will raise prices on most goods as truckers will be hauling them and our expenses will be way up. We are barely hanging on as is. There are new regulations on truckers that are going to be a huge hit to us and adding a national sales tax will put many of us out of business.

  • GregInFla

    In addition to gas taxes, we

  • Vaughn Harold

    deductions that everyone holds so dearly is part of the spending problem in Washington. By the way Cain’s plan places everyone under the same system. So even those with more will feel the same pain in their budgets.

    I would much rather my income problems be addressed with local competition amoung employers than with the Federal government regulating wages.

  • lineholder

    I’m going to provide a link for a site that has a 9-9-9 calculator that can be used to calculate tax rates. But at the site, what is stated is that the (amount put into savings + amount donated to charity + amount spent on non-taxable items) are all deducted prior to calculation of tax. Non-taxable items include:

    Mortgage or rent payments:
    Auto loan or lease payments
    Services (day care, dry cleaning, car wash, garbage collection, yard service, wedding planner, legal services, etc

  • papabear

    Not only is your withholding gone, the employer match is gone.

    IF I spent every penny I made, the max tax rate I would pay would be 18%.

    As of now, if you include withholding, + the employer match, and my Federal taxes (I also added the employer matching into my salary), I pay 23.55%. despite having lots of deductions.

  • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

    That’s fine, but what not make that the issue that the minutia of each person’s tax form, before and after.

    Just state flat out that you will not favor an new tax plan unless it lowers or keeps the same all taxes by all taxpayers. Otherwise, the whole exercise is quite puny and self-indulgent.

    Or will anyone admit that they don’t care if other people’s taxes go up, so ling as their own goes down? If so, then you belong in the Dem party.

  • congressworksforus

    At $4 a gallon, half of the 9% sales tax on gas would be a replacement for the current federal gas tax (18.4c a gallon).

    At $3 a gallon, it goes to about 6%.

    At $2 a gallon, it’s entirely replaced.

    Think a little, people :)

  • http://whattoreadtoday.blogspot.com/ Paula

    If mine are going up, then you can be sure millions of other families will see their taxes go up as well. I’m not some unique case with oddball deductions and creative tax loopholes. Why should I, as a conservative, support a plan that will likely raise my taxes and the taxes of most of my friends and neighbors so it can be funneled to the federal government and spent on studying the mating habits of shrimp?

    I think 9% is a fair amount to pay in federal taxes. Period. If that were the extent of it and there were no added sales tax, I’d jump on the band wagon. The federal government has no business taking 12%, 20%, 30% of anyone’s income. EVER!

  • http://whattoreadtoday.blogspot.com/ Paula

    Do you have a link to Cain’s list of non-taxable items? I haven’t seen them anywhere.

  • lineholder

    and you’re correct that it isn’t listed there. But the tax calculation site has been staying up-to-date with changes in the plan at each step of the way.

    I’ll try to find out more if I can.

  • kywrite

    is an endorsement of Gingrich’s and Bill O’Reilly’s point that any new tax plan must guarantee that government receipts will be spent only on items critical to the functioning of our country, like military and the phase-out social security payments? I can agree with that. Definitely time for Cain to talk about it, too.

    AFA limiting fed taxes to that initial 9%, we owe so much that this is unrealistic. We are also paying so much in hidden taxes that I suspect a majority of us are paying well over that 9% already, just not realizing it because it’s folded into the price of goods, etc. Maybe we could talk about phasing out the sales tax once the debt is remedied and the budget balanced?

  • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

    From The Transom/Ben Domenech

    Avik Roy:http://goo.gl/riywP

  • lineholder

    I’ve found nothing in writing re: what is or is not included as exemptions in the 999 plan so far. I did however attempt to make contact via email to someone outside the site and I’ve received a response from them. In essence, that there are numerous interpretations of fair tax plans floating around.

    In this case, I apologize. It would be better to wait until such time as further confirmation is provided from Cain’s site.

  • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

    The 9-0-9 plan for those below the poverty line already reduced it as well. I remain leaning to modified 9-9-9 over Perry Plan but still thinking/studying. I am tied to no man and no plan. All is based on the merits.

  • http://whattoreadtoday.blogspot.com/ Paula

    I think it’s a good question. Seems like

    a) Cain should have a calculator on his site
    b) Be he should be in front of this with a list of exemptions, if any. Until we see this, we must assume there are none.

  • congressworksforus

    But I’ll take 9-9-9. At least that way I get to choose somewhat what the government steals from me…

  • GregInFla

    Buying a used car? No fed. sales tax. Paying for services? No fed. sales tax. Buying anything used? No fed. sales tax. If the poor or smart buyer bought used plasma TVs from the pawn shop? No fed. sales tax.

  • GregInFla

    if Al Gore buys a new Fisker electric sports car? Big Fed. sales tax, and ZERO 7500-dollar-tax-credit. I like that part!

  • JSobieski

    the tax is charged throughout the supply chain

  • daendda

    Just because the employer has to match your withholding doesn’t automatically mean you will get it if 999 takes effect.

  • papabear

    When I consider the costs of employees, I add salary + overhead. The employer matching is overhead. I will admit that if matching requirements were removed, I may or may not give the money to my employees. The wage I pay is dictated by my competition. I pay in the top 10-25%, but my employees are top notch. Those that don’t prove their worth are encouraged to find employment elsewhere.

    The taxes on my business WILL go down. Perhaps you have not owned a business. My sole proprietorship has a direct tax that is equal to both the employee withholding + the employer (me) match. I also pay personal income tas on profits.

  • daendda

    Not all businesses. I wasn’t referring to one business in particular and until you hit me with your “gotcha” you weren’t either.

  • APA Guy

    And FYI to anyone else who tries the gotchya game (i.e. “I own a business, therefore my opinion is automatically more valid than yours…), remember this: Many non-owners working in the private sector have been decision-making authorities for businesses…including labor decisions predicated on tax policies coming out of Washington. Let’s get off our high horses here for a bit and actually debate the merits of the 9-9-9 plan instead of inserting subjective single cases that presume to speak for the entire business world.

  • papabear

    I am trying to get people to think in the terms that I as an employer think in. If I no longer have to pay the matching, I will do one of 3 things with the money:

    1. Plow the money back into my business structure. I will either invest in new equipment or hire more people.

    2. Invest in my people. If I can get better performance and/or employees, I will increase what I pay.

    3. Spend the money on my wife and kids.

    Unfortunately, there has been very little of #3 for many years. I suspect it will be many more years before my businesses will truly be stable again.

  • papabear

    I never said that my opinion is more valid than daendda’s opinion. However, business owners clearly have a different decision making process. It is smart for people to look at it from all sides. I was trying to offer that perspective.

    FYI if you think I am a “subjective single case”, you need to go to a local Chamber meeting (Chamber of Commerce).

  • daendda

    What you are saying is:

    “Just because the employer has to match your withholding doesn

  • APA Guy

    You don’t speak for so much as a majority of business owners I know here in the Hoosier state, let alone for all of them

  • papabear

    The precise quote would be:

    “I will admit that if matching requirements were removed, I may or may not give the money to my employees.”

    However, the possibility exists that some of the money will go to employees. Over time, a competitive employment process will result in additional wages for employees.

    Of course you may be right. Maybe “the man” is out to screw you.

  • daendda

    Or you can can go with the tried and true option of pulling out a strawman to beat me over the head with. Get a clue. I never said anything about “the man” trying to screw anybody. Pathetic really.