Cain adds to 9-9-9 plan angering unions

Fox News ^ | 10/21/11 | James Rosen

[magritte]

Example An automobile dealership in Saskatchewan sells an automobile to a customer for $20,000, plus $1,000 GST. The dealer informs the customer that the manufacturer is providing a $1,000 rebate. The customer chooses to use the rebate to reduce the payment for the automobile. The dealer charges $1,000 GST.

Selling price $20,000 GST ($20,000 × 5%) + 1,000 Subtotal $21,000 Less rebate − 1,000 Customer pays $20,000 Manufacturers who pay rebates may claim an input tax credit (ITC) for the GST/HST equal to the following percentages of the rebate amount in the reporting period in which they paid the rebate: 5/105 for the GST, or 12/112 in BC, 15/115 in Nova Scotia, or 13/113 in the remaining participating provinces for the HST.

Special rules apply if the customer receiving the rebate is a registrant who is entitled to claim an ITC or a GST/HST rebate on the purchase. The manufacturer has the option of calculating the GST/HST on the value after the reduction is applied. This means that the manufacturer will not claim an ITC on the rebate amount. Otherwise, if the GST/HST is included in the rebate, the customer, if a registrant, will have to remit the GST/HST equal to 5/105 for GST, for the HST 12/112, 13/113, or 15/115 for HST for the rebate amount.

[TheOldLady]

Click to Talk to the Hand

You have the right to chatter your little head off.
Anything you say will be laughed at hysterically.
Requests for an attorney will be ignored.
No one's paying for a dang thing for you.
I don't care whether you understand or not.

Prevent this kind of abuse
Abolish FReepathons!   Go Monthly

[RockinRight]

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.

There is a fine line between a scam, and a legitimately lower price due to the tax from market forces themselves. also, if a builder is going under and liquidating (therefore, selling at a discount), that too can be problematic.

[RockinRight]

It could encourage builders to buy and rehab old homes vs. building new ones.

[Norseman]

I appreciate your reply, but I’m afraid I’d have to guess at the meaning of all the acronyms you used to even hope to understand it.

From what I did get of it, it appears that you pay your deductible plus the sales tax on the repairs, i.e., that the insurance doesn’t cover any sales tax.

I’m not sure how this is a “monstrosity.” It just seems to be the way the law is written. It could as easily be written to allow the insurance to cover sales tax along with repairs. But a choice had to be made. Or maybe more expensive policies are available that cover all expenses including the tax? I just don’t know enough about it beyond that.

I do suspect though that if the tax was 9%, the policy would cover it here, because 9% would rival a lot of deductibles on car policies here. Don’t know though. Seems to be an insurance issue more than a tax issue. Our policies currently cover state sales tax, for example.

[NoDRodee]

So, what is to keep a builder from greating a subsidiary that does nothing but buy the homes from the builder? The builder builds them, then the subsidiary buys them, at some fraction of their real cost. The subsidiary pays the sales tax. Then the subsidiary sells the homes as used homes on the secondary market, for double the price.

The Subsidiary will have to pay 9% on the initial purchase of the home they bought cheap (Sales tax).
The Subsidiary will still have to pay 9% on the profit of that sale that was doubled (business tax).

Say is cost a builder 50,000 to build a home.
Builder’s Subsidiary buys the home for 50,000 and pay 9%, he pays $54,500.00
Subsidiary Sales home for 100,000.00 as used. His profit is $45,500.00 which they pay Corp tax of 9% he makes $41,400.00

Strait up builder sales as new
Cost 50,000 sales for 100,000
$50,000 profit at 9% he makes $54,500.00
end buyer pays the 9% of $100,000.00

[Atlas Sneezed]

There is a fine line between a scam, and a legitimately lower price due to the tax from market forces themselves. also, if a builder is going under and liquidating (therefore, selling at a discount), that too can be problematic.

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The sales tax is simply based on the true discounted sale price. If a house is flipped for a much higher price, but the original tax-paying buyer bought a bunch being liquidated, then there is a good reason for the lower tax. The facts of each case will generally make it plain whether there is an avoidance scheme. The law would probably apply the tax to the true market value, if that differs from the price paid.

[calex59]

What you should know, and the other guy isn't telling you, is that Canada, and other countries with a so called sales tax, don't have sales taxes, they have VATs(value added taxes)which tax goods at each level of sale up through the consumer. By the time it reaches retail level the tax has multiplied. A sales tax is only implemented at the retail level and only paid once. For instance, I make a car, sell it to the wholesaler, he sells it to the retailer. The tax I charge is tacked onto the price of the wholesale guy, when he sells it, it is taxed again and the retailer adds that tax to the price of the item(car or whatever)and it is taxed again when the customer buys it. So, the customer is paying the tax 3 times at least.

With a retail sales tax he only pays the tax once.

Also, there are ways around many of the so called arguments against a sales tax, they can be written into any amendment.

[BagCamAddict]

This is an excellent question, and one that needs to be vetted before any legislation is written and voted upon.

I'm sure we can't know the answer to this because the “plan” is not much more than talking-point form right now. Cain is presenting it as if it is all thought-through, but it is not. It's a starting point.

I wonder if one way of handling this is that every individual component of a new home (the lumber, the paint, the carpet, the appliances, the roofing, etc.) is purchased.... I wonder if those components would be considered Retail purchases that would be taxed at 9%, or if they would be considered Business Purchases and therefore included in the Business tax of 9%... Cain states that nothing would be “taxed twice”, so if the individual components were considered retail purchases, then the home itself should not be taxed upon sale.

Who knows. Time will vet the details.

All I know is it's a starting point for serious discussion about revamping the tax code. And that is what I like about it, whether or not any of it ever gets passed.

[Norseman]

What you’re describing sounds like two of Cain’s 9’s, the business tax (where each level is taxed on value added) and the national sales tax, where the consumer pays a tax on the retail price.

I’m assuming though that, in Canada, only the value added portion is taxed at each level. It makes no sense to have each wholesale level pay tax on the entire value of the transaction to that point. That would be too detrimental to the movement of goods in the supply chain.

[Atlas Sneezed]

I just hope my county can get in on this, so I can pay less in taxes than other americans who are too stupid to get THEIR community labelled an opportunity zone.

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You almost got it. Here’s another hint from the article:

‘Does Cain envision an entire city or state qualifying as a zone? “the bigger the zone, the better,” the adviser replied.’

Cain seems content to make the whole nation right to work, no minimum wage, and his other conservative economic policies, all voluntarily adopted locally. I only feel a little guilty that he would be using federal power for good, instead of for ill like the Dems and RINOs have long done.