>>> I believe the cost of certain services and products will fall in price if the 9-9-9 plans comes to be. Isn’t it logical to think if the corporate income tax drops from 35% to 9% then businesses will be able to roll prices back?
From the Laffer article in the WSJ:
“Thus, Mr. Cain’s 9-9-9 tax base for his business tax is $9.5 trillion, for his income tax $7.7 trillion, and for his sales tax $8.3 trillion. And there you have it! Three federal taxes at 9% that would raise roughly $2.3 trillion and replace the current income tax, corporate tax, payroll tax (employer and employee), capital gains tax and estate tax.”
It would appear that about 38% of the revenue from the 9-9-9 plan would be derived from the corporate tax. Looking at the current Monthly Treasury reports, corporate income tax accounts for about 8% of revenues under the current plan. Assigining half the payroll tax receipts brings the corporate share to 26% of revenue. I’m not sure how they will be able to roll back prices.
I'm no Art Laffer, who I admire, but then the 9-9-9 plan really is a 9-9-26 plan. If that's the case Mr. Cain has been esposing that there is no baked in taxes in products, but there's only a single tax that the consumer pays only on new goods.
I really can't see how a manufacturer who buys raw materials for what ever he manufactures is exempt from paying those taxes. If Joe the Baker buys nuts from the store to make a cake, he pays 9% tax on those nuts. When he's done with his cake the patron at the bakery buys the cake and pays 9% on the cake. He can't exclude the price of the nuts in the cake and say the tax is already paid.
I'm starting to see that the Herman Cain tax plan which sounds simple really isn't and if that's the case it's going to go down in flames.