What happens to corporate taxes under Cain's 9-9-9 plan?

[zzzz]

Almost EVERYONE is ignoring the simple fact that Cain's 9% corporate taxes will eliminate what corporations deduct and require 9% tax payment.
...

And they will be obliged, no required by stockholders to raise prices to make up that 9% to keep profits coming in. Therefore the average American will pay 9% federal sales tax, 9% income tax and an increase in prices to make up the 9% in corporate taxes. This does not include state and local sales taxes.

 

[BenNatuf]

Almost EVERYONE is ignoring the simple fact that Cain's 9% corporate taxes will eliminate what corporations deduct and require 9% tax payment.
For the FACTS check this table from the IRS:
SOI Tax Stats - Table 2 - Returns of Active Corporations
In 2008 5,847,221 corporate tax returns showed:
Reported gross receipts: $28.568 trillion
Total deductions 27.686 trillion
Net Income .984 trillion
Income subject to tax .978 trillion

Total income tax after credits: 228.5 billion or 23% of income taxed!

But under Cain's 9% ...
Estimates are nearly $2 trillion sits in cash or offshore assets by corporations that paid the 23% taxes.
Assume $1 trillion is put back into the economy.
Assumed by hiring 8 million people at $40k and the remaining spent in the economy...
The multiplier affect of 1.18 would generate another $200 billion in tax revenue!

But detractors of 9-9-9 haven't considered that!

why would I assume any of that?

Let's look at the math.

Current system

C Corp that is not a retailer or whoilesaler has 1M in revenue and nets out about 10% (thats about average) for a PROFIT of 100K. The tax on 100K is 34% meaning they pay 34K in incometax. That assumes no investments, no credits and no special tax treatments. Just the standard business deductions. (COL, Opperations etc. Just the standard and universally accepted stuff). If I included all the other stuff thier tax would go down, but thats what it is at the MAXIMUM. The average company thats not a retailer has about between 60 and 65% of thier revenue invested in cost of labor, weel assume the lower number and say they have 555K generating 45K in payroll taxes for 60%. Thier toatla MAXIMUM tax owed to the government is 35K pluc 45K or 80K.

under 999.

Same C Corp, not a retailer or whiolesaler, 1M in revenue. The formulae is Revenue-investments-products bought from US companies. We will assume the same investment of Zero we did with the first company, and we will assume they purchase 150000K in products from US companies and NONE from foriegn companies (as if thats possible). Why do we make this assumption? Because if we assume they buy from foriegn companies they get taxed twice, once when they pay the sales tax on the purchase and once when they don't get to deduct it from revenue. So this treats them as well as they can be treated for the example. The only thing doing anything different can do is make the tax go up. Also it makes absolutely nio difference about the inc=vestments as when they make the purchase (new oven for a baker) they'll pay a 9% sales tax as the end user and the math is a wash.

1M - 0 - 150000 = 850K X 9% = 76500 in incometax (+) 150K X 9% = 13500 in sales tax for a total tax burden of 90K MINIMUM

an increase in thier total tax burden of 10K.

It's different for a retailer or wholesaler because they don't pay a sales tax on items bought for resale, and if they buy them from a US company they get to deduct the cost from revenue too. Giving retailers and wholesalers a lower tax burden than service or manufacturing industries. The exception is again goods bought from foriegn companies, so I'm not sure how wal mart and other discounters or the dollar store will fare in this insane plan since they buy and sell so many foriegn products. They still won'y pay a sales tax when purchasing them, but they won't get to deduct the cost from revenue either.

 

[BenNatuf]

DUH.. they don't have 35% tax rate so the bring back the $2 trillion offshore!

Paying as 9% tax in revenue is not better than paying a 35% tax on profit.