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Author: bacon Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121097  
Subject: Re: Cain 9-9-9 Date: 10/16/2011 9:59 AM
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Finally, the burden of the 9 percent business income tax would be passed on to them as well....

This is largely true--business taxes are a cost that gets, at least somewhat, passed on the the consumer. The problem I see with the critic's logic is that this is also true under the current tax regime--where the business is passing on its current 35% tax rate. Thus, even if all of the 9% (or 35%) business tax were passed on to the consumer, 9-9-9 represents a significant tax rate reduction to the consumer.

The problem I have with 9-9-9 is that 9% sales tax. I think this hits the poor and non-working disproportionately relative to their income. Stipulate arguendo that Cain's tax plan will result in an economic stimulus that ends in full employment and further that his plan will result in a net reduction of market prices. Full employment historically has meant unemployment in the 4%-4.5% range--all these folks want jobs but can't find them. These non-working still must pay the sales tax on the necessities they must buy, even though they have no income. Full employment also does not account for the voluntarily non-working--those scofflaws who were rude enough actually to retire. These folks have a fixed retirement income, and they also must still pay the sales tax on the necessities they must buy. Also, with everyone paying the same sales tax on those reduced prices, the poor and non-working still are paying sales tax disproportionately. Finally, Rep Bachmann has one thing right: the sales tax is just one more pathway along which the government can raise our taxes.

Eric Hines
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