9 - 9 - 9 for a business owner

Discussion in 'Politics' started by alan1, Oct 9, 2011.

  1. alan1
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    alan1 USMB Mod Staff Member Supporting Member

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    I was thinking about Mr Cain's 9-9-9 tax plan and had a thought jumped into my head (yeah, me thinking is kinda scary).

    Two of the 9's.
    9% business tax rate.
    9% personal tax rate.

    So, lets take a small business owner that pays himself a salary from the company he/she owns.
    That business owner will pay the exact same rate of tax regardless of the salary he pays himself. He will pay the 9% as an individual if he draws the profit as a salary or pay the same 9% if he leaves the money as profit for the company and pays himself less in salary.

    There is no hiding of money or manipulation of tax code to pay a lesser rate based upon differences between personal or business taxes.
    It's brilliant.
     
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  2. WatertheTree
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    WatertheTree Senior Member

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    Its really much worse then that. 9-9-9 is a tax plan written by wall street and the federal reserve.

    It will shift all corporate taxation to the companies that provide real goods and services while companies that generate huge profits while supplying nothing tangable to the market will pay the least.

    And what will change with big business hiding money and beating the system by any means??? Nothing, they will continue to pay very little compared to smaller business without the same resources.
     
  3. Foxfyre
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    Foxfyre Eternal optimist Gold Supporting Member Supporting Member

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    Profit is profit whether it is based on 'tangibles' or not. The plan is that business will pay 9% of their profit. And because that 9% is lower than or very competitive with overseas markets, it will provide a huge incentive for corporations to bring their operations, and the jobs associated with them, back home. In many cases it would even offset the higher wages that Americans normally earn.
     
  4. alan1
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    alan1 USMB Mod Staff Member Supporting Member

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    I'm unsure what you mean by "It will shift all corporate taxation....". My understanding is that the 9% business tax rate applies equally to all business's and their profit, incorporated or otherwise.

    The part I think is brilliant about Mr Cain's plan is that the 9% tax rate applies to both the business and the business owner, regardless of where that money ends up.
    I am very anti-tax, but I am also a realist and understand that some monies need to be paid in order to support the operation of the federal government. 9% income tax seems to be a somewhat reasonable rate for all to pay. The 9% sales tax seems a bit high to me. I currently don't spend 100% of what I earn, but if I did, the combined 9% income tax and 9% sales tax is less than what I currently pay.

    Another thing about a federal sales tax (coupled with a reduction in income tax) is that the underground economy will start paying some federal taxes that they currently avoid, because they have no "declared income" or undeclared income. The obvious example is the drug dealer that pays no income tax because his earnings are hidden. Less obvious are people like the guy that mows my yard. I pay him cash, I don't fill out a 1099 form for him and I guarantee you that he doesn't declare that $30 every other week as income on his federal tax return.
     
  5. Inthemiddle
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    Inthemiddle BANNED

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    Actually, you're neglecting something, which is that national sales tax. The concept of a national sales tax is intended to place an increased comparative tax burden on lower and middle class individuals, a comparatively weak tax burden on the wealthy, and especially a negligible tax burden on companies that do not deal in "tangibles."
     
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  6. Foxfyre
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    Foxfyre Eternal optimist Gold Supporting Member Supporting Member

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    There have always been two prices with the little guys. The price with tax included if you pay by check or credit card that leaves a paper trail and inspires him to declare the income on his tax return - and -

    The price that is less if you pay in cash with no paper trail and that won't make it onto the declared income.

    Such practices exist now and will no doubt continue to exist under Cain's plan if it should ever become law.

    But no business can afford to hide all its income or else the IRS will declare it a 'hobby' rather than a business and none of the expenses of doing business will be deductible and you won't be able to qualify for a business license, business insurance, bonding, or a loan if you should need one. I believe the current rule is you have to show a profit for three years out of every five. So the barter system will continue but won't be a problem any more than it is now.

    What we're shooting for is a tax AND regulatory AND mandate system that allows American businesses to be competitive with everybody else. That gets everybody up and running, provides jobs for anybody who wants one, and the increased business activity plus all those additional tax payers and the reduced strain on social services will net the federal government hundreds of billions if not trillions more than will Obama's solution which is to tax business more and punish the millionaires.
     
  7. alan1
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    alan1 USMB Mod Staff Member Supporting Member

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    The practice will exist no matter who is president, governor, mayor.
    Many states and cities use sales tax as a means to harness the monies from the underground economy. I abhor taxes, but a sales tax does make others help pay for the government they have, even those that have hidden income.

    A business will do what is in their best interest (and the best interest of shareholders) to maximize profit. Avoidance of taxes is one of those things. A lower corporate tax rate will keep business's in the US instead of outsourcing. American workers in America pay US taxes, foreign workers in a foreign country don't pay US taxes. Americans spend money in America (thus stimulating the American economy), foreigners spend money in their own country (thus stimulating their country's economy).
    It really is that simple.
    I fail to understand why some think that punishing others with exorbitant tax rates is the answer. People avoid pain and expense whenever they can. Making it painful or expensive to do business in America is not the solution to growing the economy.
     
  8. WatertheTree
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    WatertheTree Senior Member

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    That was my point exactly. A business that pours money into the economy so it can make a profit will be hit harder by this then say jp morgan who essentially does nothing tangible but is one of the most profitable.

    Clearly written by wall street and endorsed by the federal reserve. And dumb-dumb republicans are bying into because 'its gonna make the poor people pay taxes to'.

    Were the country not permiated with the stupid the neocon movement would never have started.
     
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  9. Foxfyre
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    Foxfyre Eternal optimist Gold Supporting Member Supporting Member

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    I know of no state or municipality that assesses tax to any bonafide business on any item that will be resold. That means that all inputs, raw materials, or outsourced activities that result in a product or service that will be resold to others should be exempt from sales tax and business tax. Coffee for the coffee pot, toilet paper, cleaning supplies, printer ink etc. to be consumed and not resold would not be exempt from sales tax but would continue to be exempt from the business tax.

    But the 9% sales tax on some items would still be so much less than one of the world's highest corporate taxes on profits that we currently have that it would still be a positive and not negative impact on the economy.
     
  10. LoneLaugher
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    LoneLaugher Diamond Member

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    Why would a corporation be expected to pay a higher tax on profits in this country than other places? Any thoughts?
     

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