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Author: wrjohnston91283 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 124215  
Subject: Re: Cain 9-9-9 Date: 10/16/2011 3:59 PM
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I ran a married couple making $50,000 through turbotax tax estimator. No children, standard deduction.

No standard deduction, no personal exemption. The tax is on gross less charitable deductions.

I know that applies under the 999 plan. I was comparing a couples taxes under current law, to their taxes under the 999 plan.

There has been no discussion of any exemptions from the 9% sales tax under Cain's plan. While I would expect any national sales tax to have SOME exemptions, given the lack of details, I assumed none. However, loan repayments would not have sales tax (although the original purchase would have; thus, the 9% would be on a number less than $44,500 for a family with loan repayments.

Water, sewer, garbage?
Professional Services?

I don't understand why you have this list.

I have not seen anything from Cain where he wants to abolish those programs. Google searches find plenty of people indicating that his plan does, but I can't find anything that Cain has said about it. Why do those programs no longer exist without a payroll tax? There is not "national defense tax", yet the army still gets money. They will be funded through the federal budget, which is how they are going to be funded in the future if nothing changes, since they are paying out more than they take in.

"Cain has strongly criticized the current implementation of Social Security, describing it as a "scam."[7] He favors reforming the current system "through free market solutions."[8]

Several times, Cain has referenced the Chilean model of redoing social security. He supports the Chilean model for younger citizens while retaining the current system for current beneficiaries."

So he's in favor of reforming Social Security by allowing people to opt out of it should they wise; which is much different than abolishing it altogether.

So elimating the payroll tax 7.65*2 and replacing it with nothing will enable us to make SS/Medicare solvent?

Again, just because there is not tax specificly called "social security tax" doesn't mean that it won't get funded. There is no tax called "department of defense tax", yet every year the DoD gets $500 billion. In 2011, Social Security is already paying out more than it takes in. This shortfall is being paid for by money received from income, corporate, estate, etc taxes.

You would pay 9% on your investment gains, unless you only lose money. The 9% is on gross income, less charitable deductions.

No tax on capital gains or dividends in the 999 plan.

"Cain's "9-9-9" plan has been called the "centerpiece" of his presidential campaign.[14][15] His initial plan proposes replacing all current taxes with 9% tax on corporate income; 9% personal tax rate, and a 9% federal sales tax. Taxes such as the payroll tax, capital gains tax, and the estate tax would be eliminated under his system. According to Cain, corporations would be able to deduct costs of goods sold (provided the inputs were made in America) and capital expenditures. Deductions, except charitable giving, would be eliminated. The federal sales tax would not apply to used goods."

Businesses are going to love no deductions for wages, rent, travel, R & D, interest expense, etc.

I read that to mean that there will no longer be separate taxes for payroll, capital gains, and estate. Income is income.

This is where a lack of details is going to cause debate. Under current law, gross income is all income, from wages, interest, dividends, cap gains, rentals, etc. Right now, Cain simply says that individuals will pay 9% on their gross income less charitable deductions. To me, that includes ALL income that a person makes.

Regarding business taxes, "gross income" isn't a term that's used. My guess is that he means "net income". Many large businesses work on very slim margins.

That being said, many businesses would also see their tax bills decrease even if it is applied gross sales, since the rate will be reduced from 35% to 9%.

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