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Author Topic: 9-9-9 sounds really dumb  (Read 340 times)
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CeeKay
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« on: October 13, 2011, 02:18:30 PM »

http://firstread.msnbc.msn.com/_news/2011/10/12/8290508-tax-group-9-9-9-a-major-tax-cut-for-the-rich-substantial-increase-on-others?ocid=twitter

Quote
The non-partisan Tax Policy Center is readying a report on Cain’s plan, though it is waiting for more details from the campaign. But it has come to some conclusions already.

Cain’s plan "cuts taxes for the rich and raises taxes on the poor,” Roberton Williams, a senior fellow at the center, tells First Read. He added that it would create a "much more regressive tax system.”

The plan would represent a “major tax cut” for the rich and raise taxes “substantially” on the poor and middle class, Williams said. "Given that a big chunk doesn’t pay any income tax, this would be a big tax increase on people at bottom end. At the top end, the opposite happens."

The top end would go from about a 35% income tax rate to 9%. "That's a big, big drop," Williams said, adding that the capital-gains tax would be another added benefit for the wealthiest. "People at the top would see far and away the largest share of the gains. Those people are going to see a huge tax cut."


adding 9% sales tax to the states sales tax is going to do wonders for people wanting to spend money too.  plus making it apply to food?

Quote
It’s also unclear what exactly the sales tax would apply to. Cain this morning on The Daily Rundown said it would not apply to used items. If it applied to houses, food, and other items, that could be a significant change.
« Last Edit: October 13, 2011, 02:20:54 PM by CeeKay » Logged

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hepcat
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« Reply #1 on: October 13, 2011, 03:24:52 PM »

Cain's banking on ninety nine percent of the US having failed their statistics class in high school or college.
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corruptrelic
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« Reply #2 on: October 13, 2011, 11:06:15 PM »

Don't know about anyone else, but all this talk about 9-9-9 got me hungry for pizza!

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Pyperkub
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« Reply #3 on: October 14, 2011, 12:39:07 AM »

Even better - did it come from Sim City?

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Long before Cain was running for president and getting attention for his 999 plan, the residents of SimCity 4 -- which was released in 2003 -- were living under a system where the default tax rate was 9 percent for commercial taxes, 9 percent for industrial taxes and 9 percent for residential taxes. (That is, of course, if you didn't use the cheat codes to get unlimited money and avoid taxes altogether.)

The campaign staffer who came up with the plan had no comment.   ninja2
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Ironrod
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« Reply #4 on: October 14, 2011, 01:49:29 AM »

Quote from: CeeKay on October 13, 2011, 02:18:30 PM

http://firstread.msnbc.msn.com/_news/2011/10/12/8290508-tax-group-9-9-9-a-major-tax-cut-for-the-rich-substantial-increase-on-others?ocid=twitter

Quote
The plan would represent a “major tax cut” for the rich and raise taxes “substantially” on the poor and middle class, Williams said. "Given that a big chunk doesn’t pay any income tax, this would be a big tax increase on people at bottom end. At the top end, the opposite happens."

While GOP tax plans are always designed for the rich, raising taxes on the lower classes really takes it to the next level for them. No wonder this guy's popular.
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pr0ner
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« Reply #5 on: October 14, 2011, 02:03:17 AM »

Quote from: Pyperkub on October 14, 2011, 12:39:07 AM

Even better - did it come from Sim City?

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Long before Cain was running for president and getting attention for his 999 plan, the residents of SimCity 4 -- which was released in 2003 -- were living under a system where the default tax rate was 9 percent for commercial taxes, 9 percent for industrial taxes and 9 percent for residential taxes. (That is, of course, if you didn't use the cheat codes to get unlimited money and avoid taxes altogether.)

The campaign staffer who came up with the plan had no comment.   ninja2

You really think Herman Cain couldn't come up with that idea on his own?
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Alefroth
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« Reply #6 on: October 14, 2011, 02:30:48 AM »

Quote from: pr0ner on October 14, 2011, 02:03:17 AM

Quote from: Pyperkub on October 14, 2011, 12:39:07 AM

Even better - did it come from Sim City?

Quote
Long before Cain was running for president and getting attention for his 999 plan, the residents of SimCity 4 -- which was released in 2003 -- were living under a system where the default tax rate was 9 percent for commercial taxes, 9 percent for industrial taxes and 9 percent for residential taxes. (That is, of course, if you didn't use the cheat codes to get unlimited money and avoid taxes altogether.)

The campaign staffer who came up with the plan had no comment.   ninja2

You really think Herman Cain couldn't come up with that idea on his own?

I think not letting Muslims in his administration is all his.

Ale
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pr0ner
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« Reply #7 on: October 14, 2011, 04:03:23 PM »

Quote from: Alefroth on October 14, 2011, 02:30:48 AM

Quote from: pr0ner on October 14, 2011, 02:03:17 AM

Quote from: Pyperkub on October 14, 2011, 12:39:07 AM

Even better - did it come from Sim City?

Quote
Long before Cain was running for president and getting attention for his 999 plan, the residents of SimCity 4 -- which was released in 2003 -- were living under a system where the default tax rate was 9 percent for commercial taxes, 9 percent for industrial taxes and 9 percent for residential taxes. (That is, of course, if you didn't use the cheat codes to get unlimited money and avoid taxes altogether.)

The campaign staffer who came up with the plan had no comment.   ninja2

You really think Herman Cain couldn't come up with that idea on his own?

I think not letting Muslims in his administration is all his.

Ale

Nice straw man.
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« Reply #8 on: October 14, 2011, 04:53:49 PM »

Quote from: pr0ner on October 14, 2011, 04:03:23 PM

Quote from: Alefroth on October 14, 2011, 02:30:48 AM

Quote from: pr0ner on October 14, 2011, 02:03:17 AM

You really think Herman Cain couldn't come up with that idea on his own?


I think not letting Muslims in his administration is all his.

Ale


Nice straw man.


No, a "straw man" argument is when you misrepresent an opponent's position, replacing it with a similar but sillier idea so you can knock it aside more easily.  Since Herman Cain did vow, forthrightly and on tape, to never allow Muslims in his administration, Alefroth is not misrepresenting his position at all.

I think the complaint you were looking for is that Alefroth is changing the subject, declining to speculate on whether or not Cain personally brainstormed a tax plan as regressive and unworkable as 9-9-9 and moving on to discuss his unabashed bigotry.  Though it's true that Herman Cain's terrible policy proposals may be *directly* related to his beliefs that Muslims are inherently bad for America, African-Americans are the victims of a targeted brainwashing program, or that poor people have simply chosen not to be wealthy, I suspect Alefroth's point was that the man is brimming with so many motives for attacking the least advantaged Americans that a plan to radically increase their taxes with a plan like 9-9-9 really could be his brainchild.

-Autistic Angel
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pr0ner
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« Reply #9 on: October 14, 2011, 06:24:11 PM »

 Roll Eyes
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« Reply #10 on: October 14, 2011, 07:26:25 PM »

Quote from: pr0ner on October 14, 2011, 02:03:17 AM

Quote from: Pyperkub on October 14, 2011, 12:39:07 AM

Even better - did it come from Sim City?

Quote
Long before Cain was running for president and getting attention for his 999 plan, the residents of SimCity 4 -- which was released in 2003 -- were living under a system where the default tax rate was 9 percent for commercial taxes, 9 percent for industrial taxes and 9 percent for residential taxes. (That is, of course, if you didn't use the cheat codes to get unlimited money and avoid taxes altogether.)

The campaign staffer who came up with the plan had no comment.   ninja2

You really think Herman Cain couldn't come up with that idea on his own?

FWIW, he didn't - from the article:

Quote
Rich Lowrie, the Ohio Wells Fargo employee who is the brains behind Cain's plan, did not return a request for comment regarding whether he is a fan of SimCity and looked to the game for inspiration.
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hepcat
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« Reply #11 on: October 14, 2011, 09:24:26 PM »

I asked an old friend of mine who teaches economics at a university in Pennsylvania about Cain's plan and he gave me this rather in depth review of it:

Quote
Cain's plan is asinine. The 9's represent, as I'm guessing you already know, a 9% personal income tax rate, a 9% corporate income tax rate and a 9% national sales tax. Note that the 9% national sales tax would be in addition to local and state sales taxes. For example, I pay 6% sales tax in Pennsylvania. Cain would increase my total sales tax to 15%.

Okay, why do I say it's asinine? The big problem with it is that it pretends to be fair in charging everyone the same tax rate when in fact it would not result in everyone paying the same share of their income to the federal government. Lower income taxpayers would, effectively, shoulder a disproportionate share of the total tax burden. High income earners and corporations would pay less than their fair share. Consider the following scenario...

Taxpayer A (a representative low income individual) has $30,000 in gross income and $20,000 in taxable income Taxpayer B (a representative high income individual) has $150,000 in gross income and $100,000 in taxable income Taxpayer C (a representative corporation) has $1,500,000 in gross income and $1,000,000 in taxable income

The sum of taxable income across these three taxpayers is $1,120,000.

First, using Cain's 9-9-9 plan, the total paid in personal income tax would be $10,800. This would be paid by taxpayer A ($1,800) and taxpayer B ($9,000) who each would pay 9% of their taxable income in taxes. Second, the total corporate income tax would be $90,000 which is paid by taxpayer C, the corporation.

This may appear fair in the sense that each taxpayer pays the same 9% of their taxable income. Two problems though...

Now there's also the national sales tax of 9%. Taxpayer C, the corporation, would write off expenditures (e.g., a new photocopier, computers, snacks for the break room, etc) as business expenses. This means the expenses lower their taxable income and reduce their tax liability. They would pay the sales tax at the time of purchase but would avoid income taxes on the income used for those expenditures. C will spend some portion of its $1,500,000 on consumption/expenses. Let's assume a reasonable percentage goes to wages and salaries of employees. About 70% of total US income is wages and salaries, so using that share taxpayer C would spend, at most, 30% of $1,500,000 on items for which a sales tax would be collected. At a maximum then, C would spend $450,000 and pay 9% of the expenditure as sales tax. That's a figure equal to $37,156.

Second, lower income individuals allocate a higher percentage of their incomes to consumption relative to higher income individuals. (Another way of saying this is that rich people are more likely to save, typically, a higher percentage of their incomes and poor people are typically more likely to save a lower percentage of their incomes.) Assume that taxpayer A spends 95% of his income and saves 5% and that taxpayer B spends 85% and saves 15%. After deducting the 9% income taxes from their incomes, we have that A spends 95% of $28,200, which is $26,790. Of that $26,790, $2,212 would be national sales tax revenue. Likewise, B spends 85% of $91,000, which is $77,350. Of that $77,350, $6,387 would be national sales tax revenue.

Adding up the tax payments (income + sales) for A, B and C...

A: $1,800 + $2,212 = $4,012...which is equal to 13.37% of taxable income (of $30,000)
B: $9,000 + $6,387 = $15,387...which is equal to 10.26% of taxable income (of $150,000)
C: $90,000 + $37,156 = $127,156...which is equal to 8.48% of taxable income (of $1,500,000)

In short, "flat taxes" are regressive. They sound nice and equitable but those least able to pay end up paying a higher share of the total tax burden. This is because a) corporations write down taxable income by taking business deductions for expenses and b) the marginal propensity to consume (that is, the 95% and 85% numbers for B and A, respectively) decreases as income rises. In fact, our current tax system appears to be progressive but, because the capital gains tax is low (15%, I believe) relative to taxes on labor-based income, sales taxes are "flat", and marginal propensities to consume decrease as we move up the income ladder, it is pretty much flat (in a true sense). This means that any movement at all towards lowering taxes for anyone above the median income is, effectively, tilting the tax burden towards the lower half of households.
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corruptrelic
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« Reply #12 on: October 14, 2011, 10:40:13 PM »

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When it comes to Republican presidential candidate Herman Cain's proposed 9-9-9 tax plan, there’s one thing all sides agree on: it’s very simple.

If you're a corporation, own a small business or count yourself among the richest Americans, you'll simply love it. If not, you'd simply pay a lot more in taxes.

http://bottomline.msnbc.msn.com/_news/2011/10/13/8304334-cains-9-9-9-tax-plan-is-simple-most-will-simply-pay-more
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