Skip to comments.Demystifying 9-9-9 and Other Fair Taxes (What is the fairest revenue system?)
Posted on 10/27/2011 9:15:04 AM PDT by SeekAndFind
Our tax system is a source of mystery and headache for many, filled with confusing benefits and detriments, depending on whether the payer did what his political masters wanted him to do. Even more disturbing is that most revenues have been hidden behind the sticker prices and omitted from our pay stubs. Revenues were hidden by politicians for two reasons: to make it impossible for the payer to determine if he received value for his dollar, and so that funds could be easily misappropriated on things the payer never used or could ever use. Herman Cain suggests that you visit his website and do your own math, but these hidden (indirect) revenues make it difficult or impossible for anyone short of a tax attorney or accountant to do the math (maybe impossible even for them as well).
First, we might review what a "fair" revenue system is. Between 85% and 90% of Americans believe that revenues should be collected in proportion to the government services used. For example, nearly everyone uses the weather services, and so a fair funding system might be a per capita apportioned among the States. The military protects both property and people, and so a funding system would be a mix of a per capita tax and a flat duty on income, which is often proportional to the property owned.
What becomes clear is that the fairest revenue system will be a combination of fees, duties (assessed at flat rates), and per capita taxes. This fairest system will be slightly regressive, since the fees, duties, and per capita would constitute a larger portion of a poor person's income. Our current tax system is extremely progressive, in that many poor people pay nothing toward the government they consume, while wealthy people contribute greater and even greater portions
(Excerpt) Read more at americanthinker.com ...
1) Most people pay 7.65% of their paycheck to Uncle Sam and don't even know it. This 7.65% does not appear on any pay stub, and you can never get it back in your refund, not even with the Earned Income Credit or any amount of deductions. This 7.65% is the employer contribution to Social Security and Medicare, and your employer deducted it before your base wage. A person earning $30,000 is actually being paid about $32,500 (or would be, if SS and MC were the only hidden taxes). The taxes which are visible to you might be $0, but in reality, you paid $2,500. Taking 9% of that $32,500 is $2,925, so under 9-9-9, you pay $425 more in income tax, but you make $2,500 more in income.
2) For SALES TAXES...
If there are $15 of invisible taxes in every $100 of goods, then under 9-9-9, that $100 sticker price might become $90 (there will still be some invisible taxes). They then pay only $13 in taxes instead of $15, for the same item. So if they spend all of their money buying goods, their total (federal) taxes go from about $7,000 in invisible taxes to $5,585 in obvious, plus $1,645 in invisible taxes, for a total of $7,230. Competition will force the wages up and the prices down.
So a single parent with one child might go from paying $7,000 in taxes to paying $7,230 in taxes -- a $230 increase -- but have $2,000 more in their pocket, and with it, buy more stuff. Instead of buying more things, maybe she bought the same things and paid $7,000 in taxes but was able to put $2,500 into her savings account. In a dynamic system, that $2,500 might be used to lend out $25,000 (the Fed at work), generating even more economic activity and more revenues for the government.
My main comment is Cain recently tweaked his 9-9-9 code to NOT Tax income up to the poverty level.
If $20,000 is the poverty level, the above $30,000 salary earner will be taxed only on $32,500 - $20,000 = $12,500.
9% of $12,500 would be : $1125, so under 9-9-9, you pay $1375 LESS in income tax, but you make $2,500 more in income.
There are a million ways this could be done.
Here is one of my ideas:
The federal budget is divided by the number of citizens according to the last census.
Each state is responsible for taxing its citizens and submitting the funds to DC. Each state can create their own tax system.
In this way, we eliminate duplication of collection services and no IRS. States can fund themselves and their share of the federal budget.
States would discourage counting illegals and “ginning” the numbers because it would mean their tax bill to DC is higher.
Right there, in the very first sentence, the author gets right to the nub for me! Do we want a tax system that allows our "political masters" to dictate our behavior through the tax code or do we wish to be TRULY free and able to pay our taxes in a manner that allows us to remain completely anonymous to the political elements? Give me the latter any day!
No matter how the tax system is revamped, we will still be in a recession that will get worse. Why? because taxes did not cause the recession, trade deficits did. When the economy prospered, taxes were higher and trade deficits were lower. The economy started tanking when China was made a favored trading partner and we traded our production seed corn and Treasuries for expendables.
Ron Paul has the best plan. No income tax.
RE: Ron Paul has the best plan. No income tax
OK, so how does he propose to fund the constitutional functions of government?
I totally agree: taxing one's income is WRONG
The fairest taxing system? Everyone pays the same exact amount. Say, $5000 per person.
Short of that, a totally flat rate of income OR sales tax would be fair. Everyone, even those freeloading deadbeats that make up the base of the democRAT party should pay their fair share.