Currentr system
Family of 4 earning 50K using standard deductions would pay taxes on aproximately 24K, the tax on that is around 2.7K. They would also have a 7.65% payroll tax amounting to an additional aproximately 3.8K making thier entire tax bill around 6.5K after the child tax credits they would likely owe less than 4.5K This is with no other deductions and no other credits.
Under Cains 9-9-9 plan
pay 4.5K up front, and then they pay another 9% on what they spend, suppose they spend 20K on taxable items thats an additional 1.8K making thier total tax bill 6.3K a $1800 tax increase under 9-9-9 for a family of four earning 50K.
This plan sucks.
Ah the what if argument.................
Well sir what if...........................
There is no what if, a family of four earning 50K including payroll taxes pays $4500 now. Under 9-9-9 they would pay the same $4500 in the flat tax and then be subject to a sales tax of 9% on what they spend. You don't start to break even under this plan until you nhit around 70K. The math is right there and if you have a problem with it I suggest you call Plethagerus or somebody.
Want to see more?
family of four earning 40K under current system
gets a $1900 refundable tax credit and pays 3100 in payroll taxes for a total tax bill of 1.2K
under 999
3.6K up front and if they spend 15K on taxable purchases another 1350 for a total tax bill of around 5K. A tax increase of $3800
how about moving to 65K?
Current system: Family of 4 earning 65K using standard deduction and getting only the child tax credit and additional child tax credit, total tax bill $2950 plus $4950 in payroll taxes for a total of aprox $7900
under 9-9-9
$5850 plus if they spend 25K on taxable items another $2250 for a total tax bill of $8100.
A tax increase of $200 and these numbers only use standard deduction and minimum credits.
and I haven't even touched on the fact that for small business' this will be an even worse tax increase since COL is not deductable from revenue under the plan. (unless your geographically blessed)
Most small business opperate on about a 10% net and have 60% of their revenue tied up in COL. Take your average small business with 1M in revenue, today they are taxed as individuals on the profit, at 10% thats 100K. and about 11000 in personal income tax plus anoth 7600 in SE taxes thier total bill is around $18600. Add to that the payroll taxes the business pays of around 45K and the total tax bill is around 63.4K
Now subject them to the business flat tax without a deduction for COL and the business gets taxed on 700K for a tax bill of 63K. But thats not the end of it, because now you have to take the 140K profit and convert to personal income for thier personal taxes (under Cain's plan business is business and personal is personal, there is no tax treatment like we have now with sub s and llc's). Why is it 145K instead of the 100K it was before? Because they aren't paying the payroll taxes at the business anymore. so they pay another $13050 in personal income taxes and then get hit with 9% on waht they spend, say it 25K, thats another 2250 bringing thier total tax bill to around 78.2K a tax increase of 15.2K
The plan sucks.
