Skip to comments.Where Cain's 9% Came From
Posted on 10/15/2011 10:09:54 AM PDT by rob777
There has been a lot of talk regarding where Cain got his 9% number for the income tax, sales tax and corporate tax. Apparently a full analysis was done by economist and former assistant to the director of the Office of Tax Analysis for the U.S. Treasury Gary Robbins. Robbins thinks that the plan would work economically, but would not sell politically:
Youre trying to go to a system that taxes income once and only once and quits double-taxing savings, Gary Robbins told POLITICO on Wednesday. Thats something that can really juice the economy, its probably worth 15 percent in growth. The problem with the big-bang changes like that, the flat tax or the fair tax, is that they are so alien to the current system that it would be a great big shock.
Though Robbins says the plan would work fiscally and economically, he believes people would never accept such drastic changes. http://caucuses.desmoinesregister.com/2011/10/12/herman-cains-9-9-9-analyst-its-a-theory-not-a-solution/
The actual number that would allow the plan to be revenue neutral is 9.1% (See table 10c on page 8: http://www.politico.com/static/PPM191_111012_999scoringtables.html
Yes, I do.
But the cynic in me recognizes that it is a problem that is not sustainable. It will solve itself over time.
The 9-9-9 plan is not perfect taxes are not popular but it is better than where O is headed what did you make now send it in it is “our” money not yours. If you grovel appropriately we will give you back enough for a bowl of soup.
The appeal to me of such a plan is not so much that my overall tax burden will go down, but that it would remove the 70,000+ page tax code and eliminate my need to waste a perfectly good weekend struggling with TurboTax or HR Block trying to figure out how much of the money extorted from me by the federal government can be returned to me.
Cain's plan would also remove all the hidden taxes and replace them with a tax that we can easily figure out. If I make $100,000 a year, then I know I will need to set $9,000 of it aside for taxes (which is considerably less than the $28,000 tax I pay on $100,000 today). No need for payroll withholding, I'll just set the $750 a month aside and let it earn interest for me in the meantime.
As for the consumption portion, which I know is anathema to many conservatives, I think it is necessary. There is a huge underground economy in which many people are not paying any taxes at all. The consumption tax will capture some of that back and this will lessen the tax burden for the rest of us.
So you are an objective observer with no dog in this fight?
Perhaps — but don’t tell me it eliminates double-taxation (not you personally).
That’s almost as good as “Ich Ben Ein Hamburger” :p
I think you are defining why it is radical. There are unknowns, but it may create the era of cleansing, real value will be more important than some perceived value.
LOL! Reminds me when I visited Vienna 10 years ago to visit my brother who was doing some work there, he speaks German fluently. He told me “The only German you need to know how to say is “Ein Beer bitte” LOL
I undedrstand the techinical difference, primarily that of a formal ownership stake. I still have a hard time reonciling why there is any difference in double taxation outside of that ownership stake.
A bank could potentially get more deposits, which would allow it to do whatever other transactions generate profits, if it could offer a higher interest rate say on a savings account. I assume the bank is taxed on it's profits like any other business (not to mention likely having a massive regulatory burden but that is a different issue).
I assume that the interest rate that a bank is willing to pay on a savings account is essentially the expected rate of return for reuse of the money through loans, etc., less the cost of doing business (including taxes on the profits realized through the reuse of deposits) less the profit.
Again I am not a banker, or an accountant. I just see a bank as a business. If that business doesn't make money I don't have a bank so I want them to make money. The interest rate they give me, while not the result of a direct ownership stake seems dependent on the cost of doing business which includes taxes on profits much like a publicaly traded company. As a result the interest rate I get is what they are willing to pay after they already pay taxes on their business and seems similar to dividends from a comopany that pays out after paying costs including taxes. One is known upfront, one is known later, both variable.
Personally, it isn't an issue, but think taxing either is double taxation on the money I put in that was already taxed anyway. THe only real difference is the level of risk/reward I am willing to take with my already taxed dollars. As you note, at least some of my dollars in a bank are "insured" while they are not in say a stock that yields dividends.
But if my investment in a bank is high enough a portion of that is at risk, though that risk is much less than in stock. That raises a new question for me, should interest earned on deposits greater than insured be treated as dividend income?
In every state where there is a sales tax now, this already happens.
Retail price of something going up or down doesn’t matter.
Who wants to pay any more taxes then they absolutely have to?
Fact is, people will spend less to save on sales taxes, especially when state and federal sales taxes are close to 20%.
I know I would.
The plans have to go before Harry Reid but it is predicted some Democrats are expected to cross over.
Both plans are long term while the President only addresses short term fixes and solves nothing, like a band-aid which soon falls off the first time it gets wet.
Cain's plan claimed to generate 2 trillion dollars, put 6 million to work. The market could surge much faster then had been expected with some confidence returning.
Then the show got into oil speculation, wet gas with Portman. [numbers are approx as I remember]
Doing what? counting and managing the 2$ trillion?
I liked Bachman, but she is out of her league now. Sad she is now remembered for the joke of 6-6-6 and the devil[she needs a better staff, they ill informed her in the NE as well on Lexington]..the Libs like to make fun of conservative plans, bills, ideals as they do not understand and do so react in the same manner with humiliation tactics. I am now dissappointed in Bachman and thought her as presidential material "for consideration". Cain deserved more respect than her team directing laughter at him over a well intentioned start to creating a solution.
I guess what you see; you don't always get.
It concerns me that it would be easy to increse from 9 to...
word was that his wife convinced him to run ... then she started complaining about how he is treated because of his religious beliefs. wanna bet she gets him to drop out/back off