The Republican debates continue with nothing much new, although the leaders are now starting to scoop mud and throw it. Herman Cain was again a target at the Las Vegas debate re his 999 plan. I wish people would read "The Fair Tax Book: Saying Goodbye to the Income Tax and the IRS" by Neal Boortz & John Linder. My blog #86 under the Books category summarizes it. People need to understand that built into a product's price is overhead costs based on taxes the product manufacturer needs to pay -- you and I understand that EVERYTHING gets passed onto the consumer! Thus, the premise of a flat tax is to UNDO some of these built-in tax costs by eliminating them (e.g., eliminate capital gains taxes of 35% on corporations in lieu of a 9% flat tax) and thus lowering the product price to the consumer. Will the manufacturer sell the product less when 35% of its taxes are eliminated? Of course, because they will still need to compete with their competitors -- lowest price, or fair price, will win. If the company needs on 9% profit now, will they look for 44% profit under a flat tax or try only to beat their competitors' price? Thus, because corporations' taxes are reduced, the price is reduced, which becomes a savings to you. Now another 9 in Mr. Cain's plan is to tax everybody at 9%. Sounds good for those in 10+% tax brackets, but how about the 46% or so that pay NO taxes today? If we assume they are all poor, you may say "woe is me." Well, their pay check will be reduced by their 7.5% social security tax (no longer would pay into social security), plus the products they buy will be some 10-20% lower as explained above. So, even they get a break! The flat tax is good for the individual, good for the corporations, and thus, good for the economy. Will your pay hold up or decrease? Since not as much is needed to buy products, I would expect pay will continue to increase at percentages as today. Pay is based on competitiveness. Pay is based on supply and demand for that specific job. If the percentage increases do not keep up to what we see today, we can still smile since not only are we still living better but now the U.S. companies are becoming more competitive worldwide.
So, what about the 999 plan don't you understand? 9% tax on corporations (their 35% goes away), 9% on you (your current deductions from pay for social security go away, leaving you with more to spend or to contribute to a 401K), and the 9% sales tax funds the government coffers to support the government. Btw: the rich will STILL pay considerably more despite lowering their income tax to 9%. Why? They SPEND more -- exponentially more than the poor. All those multiple houses, service people, and as George Carlin would say, "Stuff". Their "stuff" is much more, quantity and cost, than even mine. So, get over class warfare if your mind already roamed their. The Flat Tax is also a Fair Tax.
Sounds like I'm backing Mr. Cain, but in reality I am undecided. It is however very important to understand specifics about each candidates plans before dismissing them because another candidate is too illiterate to understand them. For example, Perry is clueless, despite the Fair Tax concept being devised by TEXANS and his own state actually prospering from a minor variation of sales tax + property taxes.
I am presently reviewing Romney's 86-page plan. It looks like an exceptionally well written plan -- think corporate annual report quality. The contents are what is really important though. I do like his summary -- sounds promising.
Cain's 999 plan will be a hard sell. People will NOT understand it and appreciate it without an education as offered from the referenced book above. Plus, his 999 plan is Phase 1 ONLY -- a step towards a Flat Tax.
Other candidates in the hunt? I would not throw out Gingrich at this point. He will be beneficial to the Republican party somehow. Bachmann also continues to show a positive image and guts enough to run this country.
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