Posted on 10/21/2011 5:39:01 AM PDT by normy
You know, I fully suspect that just because it’s Cain, there will be Perry-bots on here defending the unions.
Now they are "opportunity zones"? Ok, gotta keep up with this.
I wonder how many "opportunity zones" will be set up in Idaho or South Dakota?
I wonder what this does to the whole revenue neutral thing.
“and it was complicated. No sales tax on used vehicles, “used” houses, etc. I don’t think this is going to work.”
THAT is complicated?
Cain’s opportunity zone plan is brilliant. It allows any element of 9-9-9 to be implemented in any order by allowing citizens to clamor for greater freedom from the local level and pursue an opportunity zone designation. As they do they get more benefits from the 9-9-9 plan. Brilliant!
Will media coverage of Cain’s plan rain all over Perry’s flat tax proposal?
A better guess is that Cain backers will clamor to cheer on the tired liberal tactic of picking winners and losers via the tax code. More breaks for the unluckiest of us all.
Cain changed the name from empowerment zones to opportunity zones because empowerment zone has a liberal sound to it. Same principle but maybe the name will trick the folks.
But states tax the sale of used items now, so the idea of having a sales tax that doesn’t apply to businesses selling used items is somewhat novel. And having it emphasized as a benefit of the plan will certainly help drive the market distortion between new and used sales.
Once again, government will be picking winners (people selling used items) and losers (businesses trying to sell new items).
But I understand why it is done, and it would seem odd to tax the sale of a used item, since it was taxed when sold as new.
One way you could make some quick money: Right before the law goes into effect, go out and clean out the electronic stores of expensive items. Don’t unwrap them.
After the law goes into effect, sell them on e-bay as “used — still in original packaging”. You’ll be able to undercut the retail stores by 5%, and still make a 4% profit.
I’m just not sure telling poor people that their taxes won’t be bad because they buy used crap anyway isn’t a selling point.
I have to say here that we buy most of our clothes from thrift shops, so I’m not really a used-item bigot. In fact, this could drive up the cost of used items, since they won’t have the 9% adder.
Exactly! Interestingly those areas with collective bargaining may have the most to gain from his plan by eliminating collective bargaining and putting power at the hands of local government and its citizens. It would make Michigan, Ohio, Pennsylvania, et al. more economically productive and keep jobs from leaving those regions to places like Texas. In otherwords, other regions of the country will see economic growth and make other states compete for opportunity zone designations. Make a local politician have to answer to citizens WHY they DON’t WANT an opportunity zone. It empowers the poor, to claim inclusion in this zone and exempt themselves from the 9% sales tax.
I’m sure home builders will have to do something, because this tax will pretty much destroy them relative to the used market.
Basically the “new home tax” will distort the market by encouraging the maintaining of old houses, and discourage building new houses.
It’s social engineering, but seemingly benevolent, because we have a big backlog of unoccupied houses that for all practical purposes are owned by the taxpayers (by the federal government mailing out banks). As a shareholder in that glut, I want the government to protect the value of my asset by discouraging the market being flooded with unneeded new houses.
Yes, it’s not a pure free market move, and eliminating the home mortgage interest deduction, and ending the subsidizing of home loans would probably achieve the same thing.
I believe that regulations could prevent the scams of below market sales of new houses to extinguish the tax bite (local real estate transfer taxes already address this, and you could impute the value by appraisal, and criminally sanction those whose sale price was much lower than a flipper got without a rise in the market. Building new houses on old foundations to call them refurbished used could be similarly regulated.
I have to say here that we buy most of our clothes from thrift shops, so I’m not really a used-item bigot. In fact, this could drive up the cost of used items, since they won’t have the 9% adder.
The rule for goods will be that if the good has never has sales tax paid on it, it’s new. If it’s water damaged in a warehouse, it’s still new, and will be taxed on the discounted sale price. Those in the business of selling previously untaxed items as used will be easy enough to detect and sanction. (eBay Resellers: Save your receipts showing you paid sales tax on your stock, or prepare for fines).
Not bad overall.
On one hand, I get a bit iffy with any attempt to encourage/discourage investment in specific areas at a federal level via tax tricks.
However, I’m OK wtih it, because...
1. It (somewhat, more on that later) amends the concern of the poor paying more on this plan.
2. It crushes the unions and throws the lack of success of the Democrat overlords in the cities right in their faces.
Still, I think he needs to tweak it a bit more to ensure revenue neutrality, and, make sure that statistic showing 84% of people paying more in taxes under his plan is not true.
>>I’m sure home builders will have to do something, because this tax will pretty much destroy them relative to the used market, especially in a time when there is already tremendous pressure because of the large foreclosure market.<<
Well, if you think about it, we sure don’t need any new homes in many areas for a while, so builders should be doing only remodeling jobs, not adding to the supply.
But this is America, and if you want to build new even when there are hundreds of used, unoccupied homes nearby, then go for it...
But then here comes Cain’s 9/9/9 and suddenly those hundreds of used homes make a lot more sense, so instead of adding to the supply, you buy one of the existing ones instead...
To me, Cain’s 9/9/9 looks like the best solution to the present housing mess I’ve seen so far. It will raise the price of existing houses and discourage more inventory from being added, exactly what is needed to clear the market and get building going again.
As for you worries about fraud, anytime taxes are involved, checks against fraud have to be established. In this case the checks would be simple, and a builder would be foolish to establish a pattern of fraudulent behavior because it would be relatively easy to detect.
That’s okay if you don’t mind the government picking the “winners and losers”, realty companies vs home builders.
If you are a fan of a National Sales Tax, check out Canada’s. It’s a monstrosity, and the future of Cain’s 9-9-9.
>>I’m just not sure telling poor people that their taxes won’t be bad because they buy used crap anyway isn’t a selling point.<<
Maybe, maybe not, but think of this “selling point”: Cain’s 9/9/9 plan encourages the recycling of used products by taxing only new products.
A green tax. How about that? Can’t wait for all the environmentalists to hop on board, because this tax actually would encourage recycling/reuse of consumer products. Waiting.....
Still waiting....
Originally, I didn’t like the 9-9-9 plan because it was said to be the first step to the Fair Tax, and the “prebate”. I was not sure about the “empowerment zones” either. Now I am totally satisfied and a supporter of the plan. I don’t think it has much of a chance to be enacted, but I DO like the plan.
[ Maybe, maybe not, but think of this “selling point”: Cain’s 9/9/9 plan encourages the recycling of used products by taxing only new products.
A green tax. How about that? Can’t wait for all the environmentalists to hop on board, because this tax actually would encourage recycling/reuse of consumer products. Waiting.....
Still waiting.... ]
Hmm, hadn’t thought of that, next time a liberal friend brings up Herman Cain i will have to mention that aspect of the 999 plan plus the fact that it also taxes environment destroying products from China since they are “New”.
If it is pissing off the Unions, even if the 999 plans hurts me financially I will get behind it 1000% just to spite the G-Damned Unions.
>>That’s okay if you don’t mind the government picking the “winners and losers”, realty companies vs home builders.
If you are a fan of a National Sales Tax, check out Canada’s. It’s a monstrosity, and the future of Cain’s 9-9-9.<<
Well, if you think about it, by sales-taxing used cars, state’s discriminate against those of us who would sell our car to an individual and then go to a dealer to buy another, because the state gets sales tax on the entire purchase price of both cars. Is that fair, when if I go to a dealer and trade, I only pay tax on the difference, and the buyer of my car pays the same tax that he’d pay anyway?
My point is that any tax system discriminates. The point is to do it in an economically sane/rational manner so that the inevitable market distortions that occur are at least in the direction that makes sense.
As for me being a fan of 9/9/9, I haven’t made up my mind yet; I’m just looking at how it appears it would play out. Why is Canada’s a “monstrosity”? (I’ll google it if you don’t have time to respond.)
There could be a rather easy way to track this, actually.
It’s a mish-mash of exceptions, regulations, bureaucracy;
Example
You are a GST/HST registrant who uses a car exclusively in the course of your commercial activities. You have an accident. You arrange to have the repairs done at the dealership for $5,000 plus $250 GST. Under the car insurance policy, there is a $500 deductible. You make a cheque payable to the dealership and claim $250 as an ITC. You forward a copy of the invoice to your insurer and ask for compensation less the $250 tax part. The insurer pays you the following:
Total of invoice $5,250
Less GST ($5,000 × 5%) - 250
Less deductible 500
Total compensation from insurer $4,500
And now, due solely to Herman Cain, the country is about to have an extended discussion about 1) the horrible effect the minimum wage law is having on inner-city youth, 2) the crying need to fix the schools in the inner city, and 3) the economic benefits of right-to-work laws where they’ve been passed.
Brilliant. We spend two weeks talking about his tax plan and now we move on to his support for abolishing the minimum wage, adding vouchers, and advocating right-to-work laws, all while framing those discussions within the confines of his tax plan.
Herman Cain, a really simple-minded sort of guy all right. So simple-minded that he’s forcing the other candidates to devise plans of their own and has Romney protesting: But, but, I have a whole 59-point comprehensive plan...that no one is talking about.
This guy is really starting to remind me of another supposedly simple-minded President that ended up with a pretty good track record. He has the same ability to frame the national conversation in terms of his own choosing. I think it’s only going to get more and more interesting.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.