Herman Cain's 999 Plan

[JustaShooter]

Herman Cain's 999 Plan is pretty simple - Businesses pay 9% on revenue after investments, individuals pay 9% on income after charitable deductions, and pay 9% Federal Sales tax. You can read about it at http://www.hermancain.com/999plan and likely lots of other places. 

I'm interested in hearing what you think about it - what's right about it, what's wrong about it, how it would affect you, etc.  I know it is asking a lot of some of you, but keep it on topic, coherent, leave the conspiracy theories in the appropriate forum, and back up what you say with facts and real world examples.

And because I started the topic, I'll start with my take: 

What's right about it:  The 47% or so of people that do not pay any Federal taxes today will now start paying some.  As Barry was so insistent about, they will have "some skin in the game" under this plan because even if they don't have any "income", whatever they spend will be taxed.  It also makes sure that corporations will pay taxes as well - no more zero tax years for GE.

What's wrong about it - well, unless I'm missing something, I and most people I know will pay more Federal taxes under this plan, and I could see where upper income brackets could pay less than they do (remember, the top 5% pay an average of 21% of gross today, so the most they would pay is 18% under this plan, and that's if they spend everything they make and pay sales tax on it.) 

So, here is a real world example for you - not me, but is typical of several people I know (Family of 4, mortgage, give 10% to the church, manage to save/invest maybe 5% toward retirement, pay about 5% state income tax):

Under current tax law, it breaks down like this:
Total income: $75,000
Total deductions: $37,500 (including mortgage interest deduction, charitable giving, pre-tax health insurance premiums, etc.)
Total Federal taxes:$9,500 (including Federal Income Tax, Social Security Payroll Tax, Medicare Payroll Tax)

Under the 999 plan it would look like this:
Total Income: $75,000
Total deductions: $7,500 (charitable giving only)
Income taxable under the first '9': $67,500
Federal Income Tax @9%: $6075

Looks good so far, but that second '9' is where it gets interesting:

Total savings at 5%: $3750
State Tax at 5%: $3750
Discretionary income: $53,925 (= Total Income - Charitable giving - Federal Tax - State Tax - Savings )
Federal Sales Tax @9%: $4853.25 (This is assuming you spend everything since otherwise, it would be savings, right?)

Total Federal Taxes under the 999 plan: $10,928.25

So, almost another $1,500 per year in Federal taxes.  These people don't have $1,500 extra in their budget, and frankly I don't have the room in my budget for the extra amount I would pay under the 999 plan either.

What's your take?

[hillbill]

sorting this out can be a pain. and it does look like some will pay more and some will pay less.he does tout his plan as just a transition plan before goin into the FAIR tax.im for a consumption tax, the lower 50% pay nothing.the upper 10% pay way more than their share.for some reason im below poverty but still end up payin a month or two worth of paycheks to the feds.not to mention property tax on everything ive built from scratch.some of it from absolute junk nobody else would mess with.cain talks straight, is known to be honest as in they cant find a dam thing on him.im a white republican and ill support him all i can. i want a tax that gets the hookers and drug dealers and layabouts payin at least sumthin!hope and change, thats herman cain!

[Hooker]

To many assumptions in your model.

This is a good plan but could be better if they were to exclude any tax on life's necessities.
Also remember this is a stop gap measure to get the fair tax to workable starting point.

 Phase 1 - 9-9-9

• Current circumstances call for bolder action.
• The Phase 1 Enhanced Plan incorporates the features of Phase One and gets us a step closer to Phase two.
• I call on the Super Committee to pass the Phase 1 Enhanced Plan along with their spending cut package.
• The Phase 1 Enhanced Plan unites Flat Tax supporters with Fair tax supporters.
• Achieves the broadest possible tax base along with the lowest possible rate of 9%.
• It ends the Payroll Tax completely – a permanent holiday!
• Zero capital gains tax
• Ends the Death Tax.
• Eliminates double taxation of dividends
• Business Flat Tax – 9%
• • Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders.
  • Empowerment Zones will offer additional deductions for payroll employed in the zone.
• Individual Flat Tax – 9%.
• • Gross income less charitable deductions.
  • Empowerment Zones will offer additional deductions for those living and/or working in the zone.
• National Sales Tax – 9%.
• • This gets the Fair Tax off the sidelines and into the game.

[hillbill]

all plans could be better!show me another candidate that even has a plan? zero cap gains tax? that will keep people from investing! not! zero death tax?why should we tax the dead on what they have already paid taxes on?spending cuts? oh my that will be bad!cain doesnt have all the answers but show me someone who has more answers? ill vote for them!sorry if i used to much sarcasm in showing my point! happy hunting!

[hillbill]

To many assumptions in your model.

This is a good plan but could be better if they were to exclude any tax on life's necessities.
Also remember this is a stop gap measure to get the fair tax to workable starting point.

 Phase 1 - 9-9-9

• Current circumstances call for bolder action.
• The Phase 1 Enhanced Plan incorporates the features of Phase One and gets us a step closer to Phase two.
• I call on the Super Committee to pass the Phase 1 Enhanced Plan along with their spending cut package.
• The Phase 1 Enhanced Plan unites Flat Tax supporters with Fair tax supporters.
• Achieves the broadest possible tax base along with the lowest possible rate of 9%.
• It ends the Payroll Tax completely – a permanent holiday!
• Zero capital gains tax
• Ends the Death Tax.
• Eliminates double taxation of dividends
• Business Flat Tax – 9%
• • Gross income less all investments, all purchases from other businesses and all dividends paid to shareholders.
  • Empowerment Zones will offer additional deductions for payroll employed in the zone.
• Individual Flat Tax – 9%.
• • Gross income less charitable deductions.
  • Empowerment Zones will offer additional deductions for those living and/or working in the zone.
• National Sales Tax – 9%.
• • This gets the Fair Tax off the sidelines and into the game.

hooker i am sorry, we all have every right to our opinion.im not flameing you for your opinion,mine differs. so be it.i do tho think lifes necessaties should be taxed.to a certain extent.air isnt taxed, water isnt taxed, food is free to be grown or gathered.may not be what yu choose to eat but its there.anybody with a balcony or a 50x50 ft yard can grow most of their own food.i know its work but thats how i was raised.thank god for america where we can do what we choose and live according to our good or bad decisions!

[Hooker]

Hillbill I'm with ya. Having a plan shows that Cain has been thinking about and working on the problem. Those others don't have a plan just talk and they will do just like the infestation in the white house is doing. Which is make it up as they go along depending on the winds of politics.
Cain is on my list and I have been supporting him so that he can be there should feel he's my final choice  It's still early and I would hate to see him fall out for economic reasons.

Pat

[hillbill]

Hillbill I'm with ya. Having a plan shows that Cain has been thinking about and working on the problem. Those others don't have a plan just talk and they will do just like the infestation in the white house is doing. Which is make it up as they go along depending on the winds of politics.
Cain is on my list and I have been supporting him so that he can be there should feel he's my final choice  It's still early and I would hate to see him fall out for economic reasons.

Pat

i hate to say it, dont even ask me how much i hate to say it! but it seems in this country it all boils down to the media. if cain gets to looking too good they will shut off his coverage. and make obama seem like the next big thing just like they did last time?if herman can just get his message out of honesty and real world politics, we should be good to go.if the media tries real hard and makes him look like a boob,no idea how they gonna do that? we will have problems.informed people like us here on GB seem to be in the minority. we vote more, but the dummy vote with their hand held out is still a obstacle we have to overcome!cain has no tolerance for the dummy vote and he will not get it!he doesnt want it and i respect him for it!

[mechanic]

At our current rate of spending and deficit, each of us owes over $50,000 for each member of our family, regardless of age or income.  If you have a family of four you owe $200,000 toward the deficit.  I can't come up with mine.
 
It's really too late for a new tax plan or anything else.  There is no feasible way we can pay our debts without printing money.  That is causing, and will continue to cause runaway inflation.
 
The 9-9-9 plan will soon be 99
 
Ben

[JustaShooter]

This is a good plan but could be better if they were to exclude any tax on life's necessities.
Also remember this is a stop gap measure to get the fair tax to workable starting point.

I understand that it is only a step on the way to the "Fair Tax" but since he doesn't spell out a time table (nor what his version of the "Fair Tax" would look like), I'm taking this at face value.  Same with your improvement of the plan - since it isn't a part of his plan, I take his plan as it is.

And honestly, I can't afford the tax increase this plan would mean while waiting on the next phase and neither can most of the folks I know.  So, if this is his plan I can't support him.  Maybe when he changes the plan in some way, but not today, not as it is.

Just a Shooter

[hillbill]

At our current rate of spending and deficit, each of us owes over $50,000 for each member of our family, regardless of age or income.  If you have a family of four you owe $200,000 toward the deficit.  I can't come up with mine.
 
It's really too late for a new tax plan or anything else.  There is no feasible way we can pay our debts without printing money.  That is causing, and will continue to cause runaway inflation.
 
The 9-9-9 plan will soon be 99
 
Ben

its too late? it may be too late to not do somthing different? the path we are on needs some correction.to say its too late is just to give up.im not giveing up!yet!i thi nk we have less than 20 yrs to turn this country around. if we dont, we will be the UK.hows that fitcha?

[magooch]

So as a family of two, my wife and I would owe $100,000.  I'd gladly pay that in a lump sum if I thought the federal government would reform our tax plan to something fair and acceptable and not increase what I already pay.  And if part of the reform included cutting spending to the bone in a lot of categories.  None of that is going to happen, so my hundred grand shall remain where it is.
 
I would fight any tax plan that introduces a new tax.  Cain's plan to start a 9% sales tax is insanity and would only give Congress a new piggy bank to exploit.

[mechanic]

Magooch, there are many who could and would pay that to resolve the problem, but there are a whole lot who simply couldn't pay it.  The only way to pay this is to grow the economy dramatically.  I just wonder if it's even possible any more.  The interest alone on what we owe is now 40% of gross receipts to the gov. 
 
Cain's plan would be a start, and probably is as good an idea as I've heard, but I believe we are in a catch 22 situation.  We need to lower taxes to grow the economy.  It will take much more in taxes to pay the interest on the debt.  BTW, we are borrowing much of the interest too.
 
I spent some time on gov. websites playing with numbers a while back, and finally just shook my head.  I can't make the number's work.
 
A collapse of our dollar and a restart, sort of like the old USSR may be headed our way.
 
Ben

[Buck-Ridge]

 I believe Herman Cain understands business and I believe he sees lower corporate tax as a way to get some businesses to come back here and employ Americans. Now with a 30+ % corporate tax and no incentive to move production here companies move overseas period. They pay lower enough taxes and no tarriff so they can afford the shipping easily and pocket the profits. Many businessman would do their work here if it was possible to do so and make money. Without knowing what the regulations rules and taxes will be they refuse to spend their capital. He and most of the others understand this. The democrats have an opposite philosophy. He would make a much better President than Obama as would most of the other contenders.

[hillbill]

I believe Herman Cain understands business and I believe he sees lower corporate tax as a way to get some businesses to come back here and employ Americans. Now with a 30+ % corporate tax and no incentive to move production here companies move overseas period. They pay lower enough taxes and no tarriff so they can afford the shipping easily and pocket the profits. Many businessman would do their work here if it was possible to do so and make money. Without knowing what the regulations rules and taxes will be they refuse to spend their capital. He and most of the others understand this. The democrats have an opposite philosophy. He would make a much better President than Obama as would most of the other contenders.

more true words have never been spoken! imagine a america where businesses are fighting over good employees?where if you have a good work record you could get a job in almost any industry you are suited for..lower the cap gains tax and people, even the less wealthy will invest. lower the corprate taxes and business will flourish because there is money to be made and they want to hire more people to make it for them. the rich get richer, and spend lavishly, the middle income americans have no problem getting a good paying job and even uneducated folks can make a good living easily working for the other 2 classes because of the disposable income they have.oh wait did i just describe the era between the late 50's and early 80's? but there is a down side, the entire country of mexico will puke its entire contents onto our borders! what then?

[DDZ]

Doesn't matter one bit what they do with taxes. Unless we stop the endless spending, and cut the thousands of useless programs nothing else will help, and we all know that isn't going to happen. Government cut their own fat? Forget it. I'm with mechanic on this. Its to late.
 Even the politicians that say they want to cut spending, end up joining the spending crowd, for fear of losing their cushy job, and their lifetime of endless benefits.
The water is about chest high, and it isn't receding.     

[Gary G]

Cain has said that his plan would be revenue neutral. This means keeping the over-bloated government.


Cain has said he would not cut the military spending. This means more deficit spending and I will see you over the cliff.


Cain supports the Federal Reserve. This means the banksters will continue to rob you of your standard of living.

[hillbill]

i know i may not be as informed as a lot of folks here, but im still waiting to hear about another candidates plan, any plan that may be better or worse?   
it is true that spending must be cut and we must return to a more self sufficent society.i dont think its too late but it is close.