[DTxAg]

Under Cain's plan, businesses pay taxes on "gross income less all investments, all purchases from other businesses and all dividends paid to shareholders." Payroll to employees are a deductible business expense now, but under Cain's plan payroll is a deduction only if you are in an "empowerment zone."

If a business pays $100,000 to its employees and at the end of the year has no money left over as "profit" (common in small businesses where any remaining profits go to the owners as corporate distributions), under the current system you pay no business income taxes. Under Cain's plan, the business pays $9,000 in business taxes on the payroll.

[palmer]

If a business pays $100,000 to its employees and at the end of the year has no money left over as "profit" (common in small businesses where any remaining profits go to the owners as corporate distributions), under the current system you pay no business income taxes. Under Cain's plan, the business pays $9,000 in business taxes on the payroll.

Dividends? What exactly do you mean by "distribution"?

[Database]

I wonder if you might rework your example to include the
savings in payroll taxes for both the business and the
employee. I suspect its pretty much a wash in this case.