Sunday, October 16, 2011

Herman Cains 999 Problem

Herman Cain - CEO of self
“Nine percent corporate business flat tax, nine percent income flat tax and a nine percent national sales tax,” he said, explaining the plan once again during Tuesday night’s Republican presidential debate.
First off you should know a family of 4 earning 50k/yr will go from $3850 in fed taxes a year to $6250! *further explained below.

Herman Cain wont explain his tax plan to lower and middle class, because he doesn't have to, all he says is DO THE MATH, and YOU SHOULD! Lower and Middle class will pay more because they will pay the full 27% because wages are earned by the lower and middle and not the rich. This means LESS taxes for those making more than $100,000 a year!
Cain’s tax plan consists of three different 9 percent taxes — one on wage income (investment income is exempt), one on sales of goods and services (including food, housing, and medicine), and one on business income (investments and purchases from other businesses are deductible; wages, however, are not). But most Americans will end up paying all three of those taxes, for a combined tax rate of 27 percent of their income.
That’s because middle and low-income Americans get all, or nearly all, of their income from ordinary wages — all of which would be subject to Cain’s 9 percent wage tax — and then they spend all of their income, which means it would be taxed again by the 9 percent sales tax. Finally, the burden of the 9 percent business income tax would be passed on to them as well, either in the form of lower wages — since wages are not deductible — or in the form ofhigher prices for goods and services.
The bottom line is that most Americans will pay all three of Cain’s taxes, making their real federal tax rate 27 percent. Compare that to the current tax code, under which someone in the bottom quintile pays two percent of their income in federal taxes and someone in the middle quintile pays 15 percent.The fact is that pretty much everyone making up to around $100,000 a year would pay more under Cain’s plan than they do now.
Not to mention this simplified tax plan has already been done before, IN A VIDEO GAME, its called SIM CITY and when Electronic Arts, the game maker, was asked about this: 
"We encourage politicians to continue to look to innovative games like SimCity for inspiration for social and economic change," said Katsarelis. "While we at Maxis and Electronic Arts do not endorse any political candidates or their platforms, it's interesting to see GOP candidate Herman Cain propose a simplified tax system like one we designed for the video game SimCity 4."
Adopting such a simple tax structure, Katsarelis said, would allow fantasy political leaders to focus their energy on infrastructure and national security. "Our game design team thought that an easy to understand taxation system would allow players to focus on building their cities and have fun thwarting giant lizard attacks, rather than be buried by overly complex financial systems."
I think the words "simplified, fantasy, and giant lizard attacks" pretty much explains what the game makers think of this idea.

The family of 4 example above breaks down as such:
If you have a family of four with an income of just under $50,000, they could end up paying more under the Cain plan. Currently, they are taxed around $3,850 in income tax. Under Cain’s plan, they would be taxed at 9 percent or pay $4,500. That’s $650 more. 
Although the family would save almost $4,000 in Social Security taxes, it would have to give up the child tax credit worth the same amount. Furthermore, it would pay an additional national sales tax of 9 percent on everything purchased, including groceries and clothes, which totals about $2,000.
That means under the Cain plan that family could end up paying $2,725 more.
Its almost as if a businessman like Cain can't do math, but wants you to DO THE MATH! Thanks Cain, I'm glad I did.

PolitiFact even gave Cain's explanation that a "family making $50,000 would have $2000 left over" under his plan, giving it a big FALSE on the truth o meter with three accountants saying Cains math doesn't add up. - PolitiFact

and the final nail in the coffin:
“It’s going to raise the price of just about everything by about 9 percent,” said former George W. Bush economic policy adviser Bruce Bartlett. “We know from experience and analysis that that tends to hurt people with low incomes.”
The Cain campaign says that his plan will not hurt people with lower incomes because under his plan employers would save $4,000 in social security taxes.  That money could then be passed along to the employees creating a system in which everyone benefits.
because businesses loves to give their employees a raise... 

also taxes on groceries?
I don't think so!

sources:
ABC News - Herman Cain plan would effectively double the taxes on the middle class
Huff Post - Herman Cain and Sim City
Think Progress - Herman Cain I have no idea how 999 would work
Think Progress - The three things you need to know about 999 plan

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