Thursday, October 13, 2011
The 9-9-9 plan is based on three taxes, 9% each: a 9% consumer (sales) tax, 9% "business" tax, and a 9% income tax. This may sound simple, and it is. Simple, though, does not mean lower taxes or anything of the sort. Under the 9-9-9 plan as it is right now, the poor will have their taxes raised and the rich will have theirs lowered. A 9% tax for everyone, most negatively impacting those at the bottom of the ladder with much smaller incomes. This means that the roughly 38% of Americans that pay little to no taxes would have their rates raised to about 27% of their total income. Yes, 27%! That is the number the federal government would need to even function properly. The rich, who pay higher taxes, would have theirs lowered to the same rate as the poorest people in the nation. Overall, this does not spread out who pays what based on their income. This makes everyone pay the same, no matter how much money they bring in.
With a 9-9-9 plan in place, it would give Congress ample opportunity to raise those. Congress would never be content in leaving all taxes at 9%. It leaves too much "power" to the people instead of to them. According to Mr. Cain, a family who takes in $50,000 a year will come out ahead under his plan. However, the numbers just don't add up. Everyday items such as milk and bread, and even clothing, would have a 9% sales tax added to the price. Not only that, but the current system which 9-9-9 would follow opens the door for a value-added tax, or VAT, in the future. This would add a tax to a product at different stages of its manufacturing. For example, for clothing, you could be charged taxes for the price a seamstress had to pay to actually get the material. It is little things like that which will add up and make such a difference for middle-income Americans.
The plan would also open the door for something called a phantom tax possibly inserted on previous savings. For example, if you bought a new car with money you had in a savings account, had accumulated in earnings, investment gains, or interest, or dividends, and you had already paid taxes on it, you would have to pay yet another 9% on that car.
I'm not sure if much of this is making sense, as much as I would love for it to. The truth is, we really do not know the specifics of 9-9-9 since Mr. Cain has not yet released them. All we have to go on right now, are those three numbers. Of course, this is the system in its first stage, meaning it could be compromised in some areas. Although, judging from how adamant Mr. Cain is about how wonderfully it would pass through Congress and work the way it is, I doubt he would be very willing to make many changes. He insists that his plan would bring in enough money to replace the current tax code and not add to the federal budget. However, since, as aforesaid, no further details have been released from Mr. Cain, those numbers are impossible to verify. The fact that the details have not come out, and that much of this plan was written by a personal banker, make you wonder if 9-9-9 is all it is claiming to be. We'll have to wait and see if, quoting Michele Bachmann, "the devil is in the details."