Posted on 10/16/2011 11:50:50 AM PDT by Cincinatus' Wife
Too late, my FRiend, too late.
I am not a tax pert by any streach of the imagination.
But in a cursory look at a fam of 4, making $50,000., filing jointly, and only taking the dependent deduction. It looks like they may save a thousand.
But then you add the sales tax. using an 8.25 State sales tax. If they purchase (by some miracle) a new car say $25000 car. Their tax doubles from 2065(est) to $4313.
Granted they would not be making that purchase every year.
but add up the clothing, school purchases, and tax on services. You could easily reach close to that $4000 figure.
I really doubt a family would be better off under this plan.
We really need someone that actually is a Tax expert like Bachmann to explain the ramifications. but as a lay person I don’t like it.
And “Wall Street” has even more negative connotations now because of Occupy Wall Street, which has been embraced by Obama and . . .
Well, you get the idea.
A whole lotta shaking going on in associating someone with “Wall Street” (the cultural meme) right now.
A couple making $50000, who files “married filing jointly”, with 1 dependent, has a current total tax of $9,450.
Under 999, the same couple, same income, same dependent, who spends 65% of their income on NEW items, would have a total tax of $7,162.
The savings under 999 = $2,288
( Calculator - http://raisingcain2012.wordpress.com/about )
There’s a link to a calculator floating around here, I’ll try to find it and send it to you.
But let’s try some simple numbers. (I’ll just pick random numbers.)
If you pay a 29% income tax rate, under 999, you’ll pay a 9% rate.
If you pay a 7.5% payroll tax (also called “Social Security” or FICA), under 999, you’ll pay zero.
If you also pay the employer’s portion of the payroll tax, 7.5%, under 999, you’ll pay zero.
So already your total tax burden has been reduced by 27.5% or 35.5% on your gross income less charitable deductions.
If you pay capital gains tax, say 35%, you now pay zero.
If you die, you now pay zero death tax on your estate.
But let’s say those don’t apply to you, so now you’re paying a 9% income tax instead of a 29% income tax and a 7.5-15% payroll tax.
How much would you save in taxes so far?
Now to replace some of the revenue you used to pay in income and payroll taxes, you are going to pay 9% national sales tax. How much will you pay? Depends on how much you buy. Beyond necessities, it’s totally up to you how much you pay in NST, because you decide if you want to buy stuff or not.
In the meantime, corporate tax rates go down from 35% to 9%. This evenuates in downward pressure on prices of consumer goods and services. It also eliminates all or most of the embedded taxes that you are ALREADY paying in the prices you pay for stuff now.
All of this results in lower prices, depending upon the market and the market sector. (IOW, prices don’t rise or fall uniformly across the economy.)
So while you are now paying a NST, the cost of a lot of goods will go down or fluctuate down over time, thus making the net impact of your 9% cost lower. And again, YOU decide how much you want to pay in NST because YOU decide how much stuff you want to buy.
What else do you get out of this plan? Fedzilla’s special interest tax tentacles and class warfare tax hikes get cut off at the knees. You get less intrusive and more responsive government. And you finally stop the growth of the parasite class that threatens to consume our freedom and send tax rates to 90% once they go over 50% of the population.
And that is priceless!
Now, let’s add in a state tax of 8.75
A couple making $50000, who files “married filing jointly”, with 1 dependent, has a current total tax of $9,450. If they spend 65% of their income on new goods inside their state, they spend $2843.75 state tax, for a total of $12293.75
Under 999, the same couple, same income, same dependent, who spends 65% of their income on NEW items, would have a total tax of $7,162 plus a state tax of $2843.75 for a total of $10005.75.
The savings under 999 is STILL $2,288
( Calculator - http://raisingcain2012.wordpress.com/about )
And all of the calculations (above) do not even take into account the savings of embedded taxes (22% of every item) as well as the 7.65 employer portion of FICA which will go back to the employee in compensation.
Thanks for the link. I’ve watched a number of interviews, and the quality of the interviewers are very up and down, but Cain is steady good.
999 taxes food amd medicines...both now exempt from state/local taxes in TX.
Here is one calculation with a state tax of 8.75%
A couple making $50000, who files “married filing jointly”, with 1 dependent, has a current total tax of $9,450. If they spend 65% of their income on NEW items inside their state, they spend $2843.75 state tax, for a total of $12293.75
Under 999, the same couple, same income, same dependent, who spends 65% of their income on NEW items, would have a total tax of $7,162 plus a state tax of $2843.75 for a total of $10005.75.
The savings under 999 is STILL $2,288
( Calculator - http://raisingcain2012.wordpress.com/about )
______
Plus the cost of goods comes down because the 22% embedded tax goes away. Plus salaries will go up, because employers will put their portion of the 7.65% FICA back into employee’s compensation
__________
I agree with you, but some of this type of thing is inevitable.
And I don’t think that empowerment zones would be a dealbreaker. They have never been very successful in reality. OTOH, if they did work on some level, a 1% differential in the tax rate would be worth it.
That said, I do have concerns about making exceptions/exemptions. That is the real devil that has always made the tax code come roaring back as a bigger and bigger monster.
At this point, the debate on the larger concept is so important, I’m willing to put empowerment zones aside for now.
Sorry, I want to add one more point:
Thomas Sowell and others have proven that one of the things that keeps these hellholes hellholes is that the cost of doing business there is so high, say, because of theft, property destruction, etc.
Therefore businesses leave and the place gets worse.
The empowerment zones would have a !% lower corporate tax rate as well. Would that be enough to offset the higher cost of doing business in a hellhole? Or be an incentive to locate there? I rather doubt it. However, it may be that it would be enough to attract certain types of business, or to promote “homegrown” businesses.
This would make these places better and that’s good for everybody.
Neither of those things will happen. Period.
Also, is the family of four taking advantage of a home mortgage deduction? Will that continue?
Is the wage earner a small business person or an independent contractor? Will mileage and ALL business deductions continue?
If they are self-employed, will they be able to continue to deduct the cost of their health insurance premiums?
There are precious few people out there paying the tax rate that you use as an example.
Welcome to FR.
I don’t know where you live but Texas has a sales tax and property taxes — paid by people living in Texas and in the case of the tourists, paid by them too.
You have great intuition. I live in Houston. Texas uses the sales tax instead of the income tax, because we are a border state. Income taxes are ineffective here. They have to be raised much higher on local citizens to pay for services that are dispropotionately used by illegals and drug cartels. Daylaborers loiter around every Lowe’s and Home Depot. Gangbangers shoot each other and end up in the hospital or in jail. Hard working Texans have to pay for their medical care and their incarceraton. Ilegals crossing the border to have babies in our hospitals. Hard working Texans have to pay for prenatal care and the delivery.
If we substituted an income tax for a property tax and sales tax, the illegals and mexican drug cartels wouldn’t pay their fair share. The drug cartels south of the border tourists, and illegals still get away with avoiding the federal income tax and payroll taxes.
It’s also a big reason that Florida uses sales tax and property tax instead of an income tax. The illegals and retirees use all the services but have no taxable state income.
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