Oct 20 2011
Cain Way Ahead In Iowa – News Media Struggles With 9-9-9 Math
Cain is turning the Political Industrial Complex on its head these days. He has come out with an exciting and potentially life saving (from an economic perspective) plan to toss out the current, busted tax code and replace it with his massively stimulating 9-9-9 plan.
But there is more good news about him. When it comes to conservative social issues he is a man of faith and conviction – and one who completely resists the temptation to play God and use the federal government to enforce his views on others. The big example being discussed today is his correct stand on abortion. He agrees life begins at conception and how the decision about family is for the family to decide. Those on the far right better understand there will be no federal ban on abortion coming, not under Cain nor under anyone else. It is not in the cards.
If the right thinks 9-9-9 is hard to sell, they better realize a federal abortion ban is basically impossible.
This center-right, libertarian sphere Cain occupies (because it is who he is, not some political strategy he maps out) is where the majority of the nation is when you look at the center of Main Street. We have our beliefs and conviction, but we don’t want to play dictator. Must be our humbleness and recognition we never know enough to lecture others on what is right or wrong in complex situations.
The result has been that Cain has consumed nearly all the anti-Obama oxygen and win control the race for the White House. If you watched Hannity and Frank Luntz’s focus group, Cain was the real winner, while Gingrich came in as best in show.
Add to that the picture now coming out of Iowa in the latest Rasmussen polling and you can see broad support congealing around Cain day by day:
A new Rasmussen Reports telephone survey of Likely Iowa caucus-goers shows that Cain is in front with 28% followed by former Massachusetts Governor Mitt Romney at 21%. Congressman Ron Paul is a distant third at 10% followed by former House Speaker Newt Gingrich at 9%, Congresswoman Michelle Bachmann at 8%, and Texas Governor Rick Perry at 7%.
If Cain really is leading the Iowa GOP caucus voters then he has truly donned the front runner status. These are not right leanng moderates or independents (who he has already). It is even more amazing if you look at Iowans who are certain to participate iin the caucuses:
Among those absolutely certain they will show up and participate in the caucus, Cain leads Romney 31% to 18%.
Neither Romney nor Perry can climb this kind of lead if it solidifies as more and more people make their decisions. Right now the momentum is still growing around Cain. I suspect it will grow and grow for weeks to come since he has not stumbled and the initial claims about his 9-9-9 plan have only proven many people don’t understand math and taxes.
For example. when I wrote my 9-9-9 For Dummies post I was clear that anyone who added 9% income to 9% sales tax and arrived at 18% was pretty much clueless:
If you add the 9% sales tax to the 9% income tax you get 18% – and would demonstrate why you should not be a tax accountant. The 9% sales tax is applied only to the disposable income that goes to buy taxable goods. Not all of your disposable income goes to buy taxable goods! Mortgage payments are not taxable goods. There probably are exemptions for insurance, etc.
Greta Van Sustern had Cain on last night and does the unthinkable, she adds 9 + 9 and got 18%. Lord save us from the ignorant (and I mean that in a nice, but honest way)
The short version of the 9-9-9 for Dummies is this: at the $82,250 income level (top of the 25% bracket) one pays 28% in federal taxes (payroll + income). Under Herman Cain’s 9-9-9 that is replaced by 9% income tax and 9% sales tax. But as I said yesterday, not all your take-home pay is used on purchases that fall under the 9% sales tax Cain is proposing. By definition you can NEVER see a combined 18% tax because 9% of your income is pulled for the income tax, leaving a maximum of 91% of your income for purchasing. (Note: for those who care, the mathematical ceiling is 17.2% of your income would go to the 9% income and 9% sales tax)
Yesterday I assumed 50% of the disposable income (left after the 9% income tax) would be used on the 9% federal sales tax. And then I compare the difference between today’s tax code and 9-9-9. This was the result:
- Under the current system the $82,250 in taxable income results in $59,209 in actual take home pay, giving the government $23,042 of your hard earned money
- Under Cain’s 9-9-9 (from the perspective of the tax payer), that $82,250 in income results in $71,430 in take home pay, giving the giving the government only $10,820 of your hard earned money,
A difference of over $11,000 dollars in take home pay for an income of $82,250. Individual results will vary, especially when you trade off deductions – but the overall result is clear. Just about everyone will have more take home pay when ALL federal taxes are taken into account under 9-9-9.
Greta may struggle with this, most people get it. So how do you stop a campaign that promises to level the tax paying field, give you more of your income back to spend as you see fit, and end the reign of liberalism run amok?
You can’t beat it. So far it simply sounds too good to be true. But it really isn’t. It is just too far outside the box for those still trapped in the Political Industrial Complex. Thankfully, they are not required for Cain to win or his plans to be implemented.
AJStrata,
The most common criticism I’ve heard about 9-9-9 is that it opens up a brand new revenue stream (the national sales tax) that can – like all the other taxes before it – be manipulated. Their belief is that it will inevitably go up from 9%. How would you answer that charge?
I would answer that this way:
The professional political panders are forever dividing the American people by class, income and inheritance with their constant pandering and tinkering with the current corrupt and un-understandable code!
Each Party plays one side against the other with the current code.
Perhaps thats why they defend it or rather deride something new?
Let those same clowns try to raise the 9% when ALL Americans are paying the 9%. No more dividing according to class or income now its the politicos vs ALL the people.
I say bring it on, IF you clowns feel froggy jump!
cain now says he will exempt the poor from his sales tax. How do you exempt the poor from a sales tax, do merchants have to verify income? Or do you set up a bureacracy to refund the sales tax, and how do you verify payment if you do? And most importantly, has he run the numbers on that yet, or did he just throw that out on the fly to make it sound better? If you exempt the poor, does 9-9-9 still work, or does it now need to be 10-10-10?
He also says that the Charitable Deduction is still in – home mortgage deduction will probably be put back in tomorrow. It concerns me to find that his plan has barely started to be known, and already he’s adding carve outs and exceptions to it. The worst of all worlds would be if this ends up turning into something that keeps the income tax pretty much as it is, and just adds a VAT. That’s the Democrat’s wildest dreams come true.
I read some more about the plan and I now think it makes sense.
Even for people who currently do not pay taxes, the plan will abolish payroll taxes, which may be approx. equal to the 9% income tax.
As for the 9% sales tax, if you don’t buy much, you save.
By importing some other good ideas from the “fair tax”, like the tax doesn’t apply to used items, the tax will make even more sense.
By broadening the tax base, the 9-9-9 plan makes raising taxes more difficult for the shysters in power.
Imagine the low income people being told by the demsheviks (primarily) that their taxes need to be raised.
They don’t care now, but they will if the plan will be implemented.
Count me in for the plan.
So you fear a new tax system because it is easier to think about politicians raising our taxes under the old one?
Highlander,
Your not going to like my answer.
Stop wetting your pants in fear of the future and make a bold move today.
Right now the libs could jack up taxes.
Fear of future lib madness is a dumb excuse not to do the right thing now.
WWS,
From the beginning he has talked about empowerment zones.
I wonder if in certain inner city areas and for others with incomes under a certain level or on food stamps, they won’t get something like a debit card that exempts them from the sales tax.
I really believe this is unnecessary, because if retailers and manufacturers were encouraged by the consumers and the president, with his bully pulpit, to pass on the tax savings, the price of goods would be virtually the same, or less than before the tax.
Thus no amount of bitching about the 9% tax would be relevant.
One of the beautiful aspects of this thing is the fairness of it, if we are going to tweak it too much here and there and create separate classes of people with different taxes it seems to me to defeat the purpose, although it still would, in my opinion, be better than the behemoth, cluster we now have.
“and replace it with his massively stimulating 9-9-9 plan.”
I’ve asked several times, where can we see this plan? It is not on his website. Tell us ‘dummies’ where we can see it and get all this good info.
I just realized, I know I’ve been guilty of it myself, but the plan can’t be revenue neutral if it is expected to stimulate the economy. The conservatives normally refer to ‘cut taxes and stimulate the economy’ Revenue neutral is not cutting taxes.
dbostan:
“I read some more about the plan and I now think it makes sense.”
I see you said you read ‘about’ the plan and not the plan itself. Do you think the plan and ‘about’ the plan is the same thing? Do you have a secret place you go to know what is in the plan.
Why the mystery? tell us where ‘the plan’ is, please.
WWS:
“cain now says he will exempt the poor from his sales tax. How do you exempt the poor from a sales tax, do merchants have to verify income? Or do you set up a bureacracy to refund the sales tax, and how do you verify payment if you do? And most importantly, has he run the numbers on that yet, or did he just throw that out on the fly to make it sound better? If you exempt the poor, does 9-9-9 still work, or does it now need to be 10-10-10?”
Thanks for asking that question, but don’t expect anyone to answer. I’ve asked it several times myself and it has been totally ignored.
My theory: to be certified poor, you will have to prove that you are on someone’s payroll and only make a small paycheck,, say 15K. I’m not sure how ‘under the table’ money is counted. I think everyone is just gonna pretend it doesn’t exist. then that person will have to carry a ‘certified poor, tax exempt’ card with him/her to use when buying things.
you’re right, the ‘carve outs’ have already started. empowerment zones, used cars exempt (why?) food exempt(why?) below poverty level,
But, and it’s a huge but, I can’t find the plan that has all this good stuff in it, and no one else can find it either. It’s amazing how so much can be said about something that apparently does not exist.
I’m worried that he’s making promises he hasn’t thought through. Exempting the poor from a sales tax is easy to say but not so easy to do, since the advantage of a sales tax is that it’s supposed to apply to everyone equally.
Texas relies heavily on sales tax and has gone down this road, they’ve done it by making certain items tax exempt. However, this quickly turned into an exempt-a-palooza that the legislature plays games with constantly. Still, at least that’s somewhat manageable, and the fraud involved is mainly political.
The cards issued to the poor seem like a good idea, but – that’s essentially a big expansion of the WIC program, and I’m betting most people reading this have no idea how big a black market there is in WIC cards already. Suppose the poor were issued an exemption card – If I were unscrupulous, why would I ever buy groceries for myself again when I just have to bring my buddy who’s poor along and I can pay 9% less every time? And of course I’d give him a cut of the action for his trouble. (fyi, I have enough friends in low places that I could set this up with nothing more than a phone call or two)
The whole idea is an administrative nightmare just begging for fraud on a massive scale. I don’t think it can be done.
I admit I have not seen details just reading Tea leaves from tidbits Herman has thrown out and parcels on his website.
I still wonder if this is not the cat luring in the mice and if it is nice job Herman. Let the politicos badmouth and demagogue a plan in favor of the status quo or a 59 page tweaker, giving the competition just enough rope to hang themselves would be a brilliant strategy, something I could see Palin doing.
I read somewhere perhaps from a commenter here that Reagan had proposed empowerment zones, inner city poor areas where the taxes would be lower so as to drive traffic and development to blighted neighborhoods while lowering the rates for the poor in the area, now that could be another stroke of genius, letting free enterprise with a little governmental nudge rebuild the destroyed economies of a poor downtrodden area.
We have something called TIF Tax increment financing designed to do the same, lure businesses into our city.
If these Empowerment zones were formed I could imagine businesses willing to invest and thus bring jobs and Hope, real hope, for jobs, to areas of inner cities that are currently warehouses for the poor, professional babymakers and drug dealers, ooopps then the drug dealers would pay less, oh well, idea still works provided the Americans there would do these new jobs, <:)
In a statement released in the wake of Santorum’s remarks, Cain said he thought he was being asked on CNN whether he would, as president, “order” people to not seek abortions.
“My answer was focused on the role of the president. The president has no constitutional authority to order any such action by anyone. That was the point I was trying to convey,” he said. “As to my political policy view on abortion, I am 100 percent pro-life. End of story.”
Cain said he would do “everything that a president can do, consistent with his constitutional role, to advance the culture of life.”
http://www.daytondailynews.com/news/nation-world-news/after-criticism-cain-clarifies-his-abortion-views-1271984.html
This may be a little long, but it is several direct quotes from Cain’s Analysis of his plan. I’m not gonna attempt to interpret those numbers like 28.6% and 40%.
Here is a quote directly from Cain’s Analysis:
“A retail sales tax would impose a transactions tax on the sale of goods and services used for consumption. Purchases by businesses would be exempt. Instead of individuals and businesses paying taxes via returns, revenue would be collected at the cash register. This means that goods produced for export will not appear in the base and imported goods will be added.A sales tax achieves neutrality between saving and consumption under Principle 2. By taxing final sales, but not the intermediate stages of production, a sales tax exempts initial saving and investment from tax. The tax occurs only when savers, investors, or workers use the returns they receive from either labor or capital to consume goods and services.The starting point of a retail sales tax would be personal consumption expenditures, shown in Table 9 as $10.1 trillion in 2008. If it were possible to tax the entire amount, replacing the$2,304 billion in current taxes would require a 22.8 percent rate.
Some items which the Commerce Department imputes as part of personal consumption do not show up at the cash register, however. Subtracting out imputations such as the value of owner-occupied housing, the rental value of buildings owned by nonprofit institutions, the output of the nonprofit and government sectors, and an under reporting adjustment, the final value of the retail sales tax base would be $8.1 trillion in 2008.
Replacing the revenues from our selected taxes would require a retail sales tax rate of 28.6 percent on an income-tax equivalent basis (not shown on table). This means that out of every dollar spent, 28.6 cents is tax.
A retail sales tax, however, is normally expressed as an add-on rate to the before-tax price of the item. An income-tax equivalent tax rate of 28.6 percent means the pretax price of the item is 71.4 cents. To generate 28.6 cents in tax revenue, the stated, or add-on, sales tax rate would have to be 40.0 percent”
and, clearly life and health insurance will have a sales tax:
“Employer contributions for health and life insurance accounted for over 96 percent of these purchases. These expenditures must be specifically accounted for in the design of a retail sales tax or as much as 7 percent of the tax base could disappear. In this case the payments made by the employer must be deemed to have been paid by the employee to conform to taxing the purchases of individuals”
It appears that everything bought for consumption will be subject to the sales tax. a direct quote:
“The tax occurs only when savers, investors, or workers use the returns they receive from either labor or capital to consume goods and services.”
“A retail sales tax would impose a transactions tax on the sale of goods and services used for consumption. Purchases by businesses would be exempt. Instead of individuals and businesses paying taxes via returns, revenue would be collected at the cash register.”
I don’t see in that statement where used goods will be exempted.
Very interesting.
“The short version of the 9-9-9 for Dummies is this: at the $82,250 income level (top of the 25% bracket) one pays 28% in federal taxes (payroll + income).”
clearly not intended for me, but quick question.
Does it matter where the $82,250 comes from? isn’t the 28% only applied to some incremental part, not the whole 82K? seems as if I recall correctly the first so many $s are exempt, then some at 10% some at 15%, etc. clearly, as I’ve shown before, my gross income was 107K and I used all standard deductions, nothing extra and I only paid 12K in taxes all fair and square and above board. now I know we’re supposed to all average and use average numbers, etc, but very few are average and I think not many at all would fit your example. I realize we’re having to guess at a lot of these things because no actual 999 plan exists, but apparently a lot of persons think one does exist.
Just saying….
Where did you get the 23K number from? The IRS tax table shows that for a taxable income of 82,250 K filing single, taxes would be 16,738 and Married filing jointly; 12,919
Red,
The plan is outlined at:
http://www.hermancain.com/999plan
Redteam,
Herman Cain said on Greta ONLY new products would be taxed he specifically said New cars would be taxed, used cars would not be, every good would be taxed only once!
I thought you recorded it, did you listen to it, did you not believe what he said, did you not understand what he said?
dbostan, I asked not to have a reference to cain’s website, that is not a plan, it’s an outline of the plan with no details.
dhunter, I still have the recording. He did say there would be no taxes on a used car, but that’s not in his ‘plan’, he may have just made that up on the spot. It’s not in writing. He did say in his analysis, not on his site, that everything bought for consumption would have a sales tax. I leave it to you as to whether used cars are bought for consumption or not. He did imply that Food would have a sales tax. most speculation has been that it would be exempt. (he said if you exempt food, you would have to double the tax on everything else to make up for it)
Again, a plea for a link to ‘THE PLAN’ apparently no one knows where it is.
[…] Cain is proving to be the People’s champion. As Strata-Sphere states, Cain is turning the Political Industrial Complex on its head these days. Cain is the […]