I was just thinking two things and was wondering what your guys’ opinion was.
Good #1) By having a VAT, it helps force undocumented workers pay tax whereas they can escape all federal tax by being paid under the table, with this plan they would at least have to pay the VAT
Bad #1) A lot of business owners cheat the system with cash transactions by charging the state sales tax, but not actually reporting the purchase and keeping the money themselves. This allows them to undercut other business in the area and make a ton of money by cheating the system and essentially promoting the greed/corruption by rewarding it. Right now say you are able to undercut the 6% sales tax, now you would be able to take in the 6% + 9% so 15% gain in profit on cash purchases whereas your profit margin may only be 8-10% on ‘legal’ purchases. Seems like this would even further promote fraudulent business practices that are essentially undetectable.
#1) A lot of business owners cheat the system with cash transactions by charging the state sales tax, but not actually reporting the purchase and keeping the money themselves.
Why would someone not report that they paid something just to save 9% and at the same time take a 100% on the business deduction?
For example I go out and buy something for 100$ that I’m going to use in my product that I will eventually sell. If I pay cash and don’t report it I can’t take that as an expense. Since it’s an expense I that comes off 100%. Why would I do something like this just to save 9% in sales tax? In essence it costs me 91%.
If there was some “Advantage” to buying with cash then no one would use anything but cash because there’s a HUGE advantage to selling for cash…but an equally huge disadvantage for buying with cash which would overshadow and gain in saved sales tax.
My understanding is that the 999 plan is 0% for capital gains. On that alone the plan seems stupid to me. Based on who the plan benefits the most, makes me wonder who came up with it…
I think what he’s claiming is that some business do not report or record revenue from cash transactions, yet they still charge the state sale tax.
For example, you buy a widget from the local corner store. List price $100. Tax rate 5%. You pay the local store $105. If you pay by check or credit, the local store reports/records $100 in revenue and passes the $5 tax on to the state. If you pay in cash, local store pretends as if the deal never happened and pockets $105.
I don’t know if this currently is a big problem. But if it is, it’s not any more a knock against a national sales tax than it is against a state or local sales tax. Seems like the response is criminal enforcement.
I don’t know if this currently is a big problem. But if it is, it’s not any more a knock against a national sales tax than it is against a state or local sales tax. Seems like the response is criminal enforcement.
This is what I meant. Currently businesses that do this are pretty good at running ‘honest’ businessmen out of business. If the amount they can leverage from this method doubles, I only see it as an even bigger problem. I think we are all aware there is not much criminal enforcement anymore (only when the gov can make money out of the deal).
My understanding is that the 999 plan is 0% for capital gains. On that alone the plan seems stupid to me. Based on who the plan benefits the most, makes me wonder who came up with it…
Should the president focus on creating jobs, or income redistribution? Maybe there should be a discussion as to whether or not reducing taxes for the rich would lead to increased revenue and job creating. Like Cain said, there are multiple problems here and lumping them all together and saying people that are successful should be punished doesn’t seem ‘fair’ to me.
I’m not sure I will come out better under this plan. I kind of think I won’t. What does interest me is the power it seems to take from politicans and the IRS.
I’m not sure I will come out better under this plan. I kind of think I won’t. What does interest me is the power it seems to take from politicans and the IRS.
He needs a website with a calculator tool that would help you figure out if you come out ahead.
I KNOW Obama is raising my taxes. I think 999 would work for me as I have a large amount that goes to charity and savings. so all of that avoids sales tax. If everthing else is taxed at 9%, that would be better than a 28% income tax for instance on those same dollars so I think I come out ahead there too. And a 9% corporate tax might affect prices, but still probably less than i’m saving on income tax. But I know it is more complex than this so I need spreadsheet or webpage. Cain needs to push his plan if he wants to jump on board.
This is what I meant. Currently businesses that do this are pretty good at running ‘honest’ businessmen out of business.
First you’re talking about business to consumer transaction. Second you’re talking about a business that would have to deal mostly in cash in order to have any appreciable effect on their competitors. Third the only way this could happen is if they don’t report the income at all. Fourth they can do this now, the only difference being “State sales tax” versus “State plus federal” sales tax.
In short you’re talking about a VERY tiny portion of overall business and you’re talking about a criminal act that is already taking place.
IOW I don’t see this as a major reason to be against the tax anymore than any other tax.
I think what he’s claiming is that some business do not report or record revenue from cash transactions, yet they still charge the state sale tax.
I think we can agree that this would be a very tiny portion of the business taking place, excluding any B2B transactions and a majority of other consumer transactions as few people actually use cash these days.
Second, as you point out, this would be a criminal act and already takes place today. So not really a mark against the code itself. By not claiming the revenue in the first place the company is getting out of paying taxes on that, which if they are a profitable corp could be 35%, rather than 9% at the fed level, 9.25% at the state level here.
I’m not sure how this would “But other people out of business” either unless he were to drop his price by the comparable amount of the tax to undercut the competition. To the consumer they pay the same amount.
What does interest me is the power it seems to take from politicans and the IRS.
I agree here. Flat tax, 9% on income, no deductions. Individuals can now fill out their federal taxes on a 4" x 8" card no bigger than their W-2. IRS is shrunk.
Furthermore it hands over 50% more power to the individual on how and or IF they want to pay taxes at all** **thru their purchasing power.
People will end up with more for working and will have less incentive to spend…I know the economy will crumble as people are no longer spending 101% of their income…this might even close up the wealth gap.
He needs a website with a calculator tool that would help you figure out if you come out ahead.
Pat - I’m not picking on you today - really!!
Should the criteria be “do I come out ahead”, or should the criteria be “it makes sense”?
I think it makes sense to look at it to see if you get totally screwed, but isn’t it “better” both in a patriotic way, and in a philosophical way, if we can all look at it and say - yeah, that makes sense and is fundamentally the right way to pay for services. I’m not advocating the 9-9-9 plan (at least in this response), but one of the problems is when a group of people look at something and try to maximize their benefit from public policy (Jeff Immelt and “green energy”, 99%-ers and paying for stuff with other people’s money, and Labor Unions/Corporations gaming the system with the bailouts).
How about we make decisions based on what is “right” for a change (or is this kinda like asking people not to vote for president based on what church he goes to)?
Article that has one of the architects of 9-9-9 altering the national tax component, back to payroll (at 9% vs the current level). Also mentioned as a contributor is Art Laffer, who is still for it, and gives his reasoning. I also read a piece by Larry Kudlow in the last couple days, where he gave lukewarm approval of the plan, with some trepidation on the nat tax aspect.
