The Fuzzy Math of 9-9-9

[liberal N proud]

There’s something to be said for simplicity and elegance. This is why the flat tax, fair taxes, and consumption taxes are always part of the debate around campaign time. It’s hard not to look at all the hours and dollars spent by individuals and businesses in preparation for April 15 and see them as a massive waste. But the reason Americans keep choosing waste and complexity over elegance becomes clear when you look at the winners and losers in these scenarios.

The big losers under 9-9-9 are the 47 percent of Americans who, because of the effects of the recession, didn’t make enough money to have a federal-income-tax liability last year. Their income taxes would go up to 9 percent.

The winners, meanwhile, live in Greenwich, Conn. Today, a hedge-fund manager who takes home 20 percent of his firm’s profits pays a 15 percent capital-gains tax. Under Cain, that hedgie pays nothing.

The sales tax favors richer Americans, too. It takes money to save money, after all. Poorer people have to spend a greater percentage of their incomes, and anything spent is taxed. According to Gallup, self-reported consumer spending is just over $23,000 a year. Cain’s 9-9-9 adds $2,000 to that bill.

http://www.thedailybeast.com/newsweek/2011/10/16/the-fuzzy-math-of-9-9-9.html

It only feels like a tax cut at a glance.

[no_hypocrisy]

1. The 9 percent VAT tax coupled with a federal 9 percent tax coupled with state sales tax

just doesn't make sense as far as "reviving" the economy. As this country doesn't make manufacturing the basis for the economy, it's based on consumer spending. What would make people cut back spending like a triple sales tax? Or rather, on "new" merchandise.

I see a few new scenarios: full parking lots at Goodwill, Salvation Army; more shoplifting of merchandise; consumers delaying the purchase of new items and repairing their current possessions (cars, TVs). And burning CDs instead of buying them.

Less revenue in taxes, less profits for businesses and corporations. Unintended consequences.

[HughBeaumont]

2. Combine that with the assumption that the wealthy will hire more if their taxes were lowered . .

. . . while present day and history proves the exact opposite (thrives on conservative faith/fallacy that the wealthy will always act in the best interests of the greater good if only given the CHANCE to :eyes: ), and you got a Somalia-sized disaster on your hands that's going to get uglier before it gets better.

Businesses aren't going to hire unless there are customers walking through that door with disposable income. Lower their taxes to zero. Doesn't matter. Demand is an element conservatives seem to treat as invisible and you just gotta wonder WHY.

[Owlet]

3. The Rich Win!

Tax Policy Center

(Oct 18, 2011) - T11-0374 - Herman Cain's "9-9-9" Tax Reform Plan; Baseline: Current Policy; Fully Phased in Distribution of Federal Tax Change by Cash Income Level

Date: Oct 18, 2011

PDF Excel

[dkf]

4. Does the baseline include dropping the Bush tax cuts?

It should.

[LiberalFighter]

5. I really wish those reporting would stop suggesting that filers

spend hours and hours on their taxes. That is totally false for the most part. Many probably don't even do the taxes themselves. They have a tax preparer do it for them even if they could easily do it themselves. Or they use the tax software available.

[noiretextatique]

it takes me about 30 minutes or less to do most tax returns

and 90% of the returns i do could easily be done by the people who pay me to do their returns. i use free sites online and charge them minimal fees. i laugh at people who pay some yahoo $300.00 to do their returns when they have nothing but w-2s because they think the person is so "good" at doing taxes. i try to educate those who are willing to learn to do their own returns because for most people, it is simple. if you don't own a complex business or have investments, there is no reason to pay anyone to do your tax returns.

[noiretextatique]

6. it takes me about 30 minutes or less to do most tax returns

and 90% of the returns i do could easily be done by the people who pay me to do their returns. i use free sites online and charge them minimal fees. i laugh at people who pay some yahoo $300.00 to do their returns when they have nothing but w-2s because they think the person is so "good" at doing taxes. i try to educate those who are willing to learn to do their own returns because for most people, it is simple. if you don't own a complex business or have investments, there is no reason to pay anyone to do your tax returns.