As far as I know it does as of this point. That doesn't mean it won't be in the final version passed, but as of today it isn't.
Remember though, you have to look at the plan as a whole. And as hard as it might be, I suggest you also look at this in non-financal terms. I assume you have kids, so consider how changing/not-changing the system would affect your kids 10, 20, or 30 years down the road.
Does this mean 9% will go on top of existing sales state tax therefore 8% will not be added to the new 9% therefore 17% is added on what you buy similar to a VAT?
It is not a VAT. See this link for the difference: http://www.nerds4cain.com/forums/discussion/106/does-everyone-understand-the-difference-between-a-vat-and-a-retail-sales-taxs
There will be a seperate federal retail sales tax in addition to any current state sales tax. They will be two seperate systems. There is a retail price calculator here that will let you see how the expect changes would affect how much you pay for items here: http://www.nerds4cain.com/Blog/archives/917
Does this mean all deductions will be taken away?
Right now, charitable deductions are the only ones allowed. Personally, I hope it stays that way. Politicians used deductions to buy votes and "warp" the tax system to favor some groups over others. Removing them removes politicians ability to control our lives.
Again, you have to look at the system as a whole and how it would affect you.
I’m under the impression that if you make less than 20 grand then you pay 5.75% tax but this will go up to 9%?
999 has a flat income tax rate of 9% for everyone. It replaces the income tax (5.75% in the case you mentioned, and the payroll tax (15.3%, half is hidden becuase it is paid by the employer). It also replaces death taxes, capital gains tax, and reparation tax--the last two have been killers on business and job creation.
Under your scenario, the person making 20,000 currently has an income tax rate of 13.4% (or 21.05% if you include the taxes paid for the employee behind the scenes by their employer.)
There is a calculator that lets you play around with some of the paycheck numbers here: http://www.nerds4cain.com/Blog/archives/723
The maximum tax rate under 999 is 16.5% (this is if you spend every cent of your income, and spend it all on new (taxable) items.
You'll notice from the calculator that you can significantly affect your tax rate by purchasing used items (say at Goodwill, something that a person making under 20,000 a year is very likely to do)--these do not incur sales taxes.
I appreciate you asking questions. Like you said, these tend to turn into arguments instead of conversations. I hope you find the calculators helpful.
Someone posted this earlier, thought I’d spread it around: http://999calculator.net/
and I really do appreciate you giving me answer how I wanted them, the way with just straight answers and no you’re this or you’re that.
Thank you.
“You’ll notice from the calculator that you can significantly affect your tax rate by purchasing used items (say at Goodwill, something that a person making under 20,000 a year is very likely to do)—these do not incur sales taxes.”
Used items may not incur the 9% tax, but I can guarantee you that the price of used items, particularly cars and houses, will rise in tandem with the higher cost of new items. The 9-9-9 plan will not be implemented in an economic vacuum....
RE: The Calculator from the site you gave in your post....
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Someone in another thread posted this to me using the calculator... and I’d like to read your comments on that.
Let’s talk about a family earning $40,000/year.
Here are some concerns with the calculations from the website you gave:
1) In the first place adding the Employer FICA to the equation incorrectly skews the results. That is a cost to the employer, not the employee, and if it is done away with then that’s a cost reduction to the employer and not an addition to the employees paycheck.
2) In the second place, since the tool does not mention marital status or family size then it’s impossible to see what it is comparing it to.
So for calculations doing it both ways.
CALCULATIONS FOR A FAMILY...WITH AN INCOME OF $40,000
A) TRADITIONAL CALCULATION BASED ON CURRENT TAX CODE
First let’s look at the median family in this country: husband, wife, and two kids. Use your income of $40,000 per year. Individual deductions are $3650 for each person, standard deduction is $11,400 for a total of $26,000 in deductions and a taxable income of $14,000. That gives them an income tax of about $1400. The current child tax credit brings that down to $600 refund. The Make Work Pay credit brings the refund to $1400. You can argue the logic behind that but it is what it is. So our family also pays the Social Security and Medicaid taxes of 5.65% less the federal refund, for a total tax bill of about $1450. Now lets look at them under the Cain plan.
b) CALCULATION BASED ON 9-9-9 PLAN
No individual deduction. No standard deduction. No credits. Just a flat tax of 9% for a tax bill of $4500.
That’s an increase of $3050 in income tax.
Add to that the 9% sales tax and their taxes go up another $2000 to $3000 or more. Their taxes easily exceed $8000, a considerable percentage of their income. Far more that they had under the old plan
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CALCULATIONS FOR AN UNMARRIED INDIVIDUAL EARNING $40,000
Now look at it for an individual. One individual deduction and one standard deduction brings his taxable down to $30650. Income tax is $4179, about $500 less than under Cain. His FICA is $2260. So with the 9% sales tax a single person doesn’t get hit quite as hard as a married couple does, but taxes do go up.
But in addition to that, what else have you just done? Under Cain’s plan the whole concept of ‘marriage penalty’ is back with a vengeance. If you’re single then it’s close to a wash. If you’re married with a family you are seeing your taxes skyrocket. Where is the benefit of that?
And another thing that doesn’t seem to be factored in in all these Cain examples is what he does to state income taxes.
In many states, state taxes are reduced by standard or itemized deductions. Without those, taxable income goes up there and the taxes for the people in your example go up another $550 to $750. So under the 9-9-9 plan the hits just keep on coming for people, married or single.
Do you have any response to this calculation?