Herman Cain's Tax Proposal Inspired by SimCity

[Drachen]

Not to mention that the proposal, from what I read, would make dividends tax-free.

Well that really helps me! I make 35k (just took a 12% paycut right before my son was born - YAY!) and last year I earned $11 in dividend income. That probably stacks up pretty well against those making 10 times (or more) what I make.

edit: corrected spelling (no that is not why I took a paycut).

[ElNono]

Well that really helps me! I make 35k (just took a 12% paycut right before my son was born - YAY!) and last year I earned $11 in dividend income. That probably stacks up pretty well against those making 10 times (or more) what I make.

edit: corrected spelling (no that is not why I took a paycut).

[101A]

The richer you are, the lower your effective tax rate is.

Person A: 9000/50000 = .18
Person B (scenario A) = 50,400/330,000 = .152727
Person B (scenario B) = 43,200/250,000 = .1728
Person C = 1,350,000/10,000,000 = .135

Scenario A is including both the corporate taxes as well as the earnings
Scenario B is excluding the above.
Person C is someone who makes 10M and spends 5M.

I found you're problem.

You don't understand that:

Profit != Income

Also, as the link Winehole provided pointed out, the business tax isn't really taxing profit at all; it's taxing much more than that. It would be impossible to predict how much that would be.

[Drachen]

I found you're problem.

You don't understand that:

Profit != Income

Also, as the link Winehole provided pointed out, the business tax isn't really taxing profit at all; it's taxing much more than that. It would be impossible to predict how much that would be.

Sorry, I will have to go back and read WH's link. As far as the 80k goes, I assumed you were talking NI not gross profit. My mistake.

In order to better assess that situation, we would need to know the effect on Retained Earnings, I guess. Either way, I guess it is moot since you said that link states it differently.

[Findog]

How can you beat such a plan? Nine toppings and nine breadsticks for nine dollars is a steal.

[Drachen]

OK, just read the link. Even worse than I thought.

[DUNCANownsKOBE]

The illustration was not intended to address that issue, and made no comment on it one way or the other.

as long as you're admitting Uncle Tom's tax policy won't do jack to address the national debt.

[DUNCANownsKOBE]

And yeah making dividend/capital gains income tax free is re ed.


EDIT: Holy , I missed the part about not taxing any income earned overseas. What a great idea! That's sure to bring all those manufacturing jobs back home and certainly won't encourage corporations to outsource at all!

[101A]

as long as you're admitting Uncle Tom's tax policy won't do jack to address the national debt.

Did I ever suggest it would?

Although don't underestimate the ability of a VAT (which is the second "9") to raise lots of money. From a strictly income tax perspective, it obviously falls short of satisfying our country's ravenous appe e, much less paying for past excesses.

I will remember, however, that you are a debt hawk.

[DUNCANownsKOBE]

What the is a "debt hawk" , someone who is a little concerned about America's fourteen trillion dollar deficit?

His tax rules are built on the re ed belief that lowering taxes on the rich and the corporations leads to a stimulated economy, a belief that's never been vindicated.

[Drachen]

And yeah making dividend/capital gains income tax free is re ed.

I honestly think that this will stifle innovation. This incentivizes the shifting company funds from R&D (for example) to sending dividend checks to their shareholders. Very short sighted I would think.

[DUNCANownsKOBE]

I honestly think that this will stifle innovation. This incentivizes the shifting company funds from R&D (for example) to sending dividend checks to their shareholders. Very short sighted I would think.

I couldn't agree more, cutting dividend/capital gains taxes does anything but create jobs and stimulate the economy like the free market re s claim. If people like Warren Buffet can use the billions they have to generate dividend income every year while barely getting taxed for it, what incentive do they have to use capital in a way that creates jobs? There's more risk and less reward for them to use capital on expanding their business and entering new markets when the alternative is barely taxed dividend income.

[Drachen]

I couldn't agree more, cutting dividend/capital gains taxes does anything but create jobs and stimulate the economy like the free market re s claim. If people like Warren Buffet can use the billions they have to generate dividend income every year while barely getting taxed for it, what incentive do they have to use capital in a way that creates jobs? There's more risk and less reward.

Pretty much. A company is getting a guaranteed (risk-free) +9% return on every dollar that they send out as a dividend. What projects can even approach matching that kind of return?

[boutons_deux]

999 Plan: A 'distributional nightmare'


For a $50K household, married couple, two kids, all income from earnings and standard deductions, the current tax burden is $8.3K. Under 9-9-9, that would grow to $13.5K, an increase of over $5,000 (hat tip: CCH, BS). The WaPo fact checker came to a similar conclusion. E Klein too.

(I expect that any minute now the Tax Policy Center will release a slew of data supporting these points with their much more detailed tax model.)

But Lowrie wouldn’t accept that conclusion. In fact, he asserted that their federal tax would be lower because they’d move from a 15% payroll tax to a 9% income tax. This, as I said on air, is “patently wrong.”

First of all, assuming they plan to exist, they’ll need to consume stuff, and thus they’ll also face the 9% sales tax. That already makes their tax rate 18%, higher than the 15%.


http://www.csmonitor.com/Business/On...All+Stories%29

[Th'Pusher]

I wish the CBO would score the damn thing so we can all see how ing re ed Cain is. The guy is not even a legitimate candidate - he's a moron.

[Yonivore]

If people like Warren Buffet can use the billions they have to generate dividend income every year while barely getting taxed for it, what incentive do they have to use capital in a way that creates jobs?

HOW MUCH IS BUFFETT’S BERKSHIRE HATHAWAY BACK-TAX BILL EXACTLY? ABOUT $1 BILLION

Perhaps he's using the back taxes his company owes.

[Wild Cobra]

9-9-9 is horribly regressive taxation, but what else is expected from a wealthy right-wing ideologue with no political experience?

Maybe we need some regression in the tax code. I find it appalling that so many people will vote for what is best for them, and not consider everyone else. Because that is human nature, what happens when those who don't pay federal income tax exceeds 50%? Do they vote to tax everyone above them 50% and the rich 75% or higher, so they can get more of "other people's money?"

[Wild Cobra]

Person 1 makes $50,000 working as a carpenter. Spends every dime.

He pays: $4,500 in income tax
He pays: $4,500 is sales tax

Total tax liability = $9,000

Business owner who has a salary of $250,000 - and whose company earned a profit of $80,000. Spent all but $20,000 of his earnings

He pays: $22,500 in income tax
He pays: $20,700 is sales tax
He pays: $7,200 in corporate tax

Total tax liability: $50,400

I don't understand why this is regressive.

I would disagree with those calculations. Maybe someone else pointed it out. After the 9% income tax, there would be $41k left over. Not all purchases will be taxable, and even is all were, it is only $3,690 in sales tax for a total of $8,690.

I haven't seen the details of Cains idea. Is there no standard deduction or exemption? Aren't necessities and rent not taxed?

[Wild Cobra]

Problem is, the 1,000 word blurb on Herman Cain's campaign website is the plan. Presumably it will get fleshed out more fully if Cain continues to shine.

I just started looking at it. Like any plan, it will still go through revisions. I can see it excluding necessities from the sales tax like toilet paper, cereal, milk, etc. Even if not his original intent, such a push will be made, and at least some basic changes like that would have to happen before passing in congress.

[Wild Cobra]

Pretty much. A company is getting a guaranteed (risk-free) +9% return on every dollar that they send out as a dividend. What projects can even approach matching that kind of return?

Stock holders will ask for higher dividends, and gladly pay the 17.19% tax (income and sales combined.)

[Drachen]

Stock holders will ask for higher dividends, and gladly pay the 17.19% tax (income and sales combined.)

why?

[FuzzyLumpkins]

Maybe we need some regression in the tax code. I find it appalling that so many people will vote for what is best for them, and not consider everyone else. Because that is human nature, what happens when those who don't pay federal income tax exceeds 50%? Do they vote to tax everyone above them 50% and the rich 75% or higher, so they can get more of "other people's money?"

Yeah you are so selfless.....

Supporting your corporate overlords just makes you stupid no matter how benevolent you try and paint it. I also am sure that you mix it with some judeochristian slave morality nonsense.

You are such a putz.

[Wild Cobra]

why?

The corporate tax is simpler and dividend payouts are a corporate deduction. No longer a double taxation.

[Wild Cobra]

Yeah you are so selfless.....

Supporting your corporate overlords just makes you stupid no matter how benevolent you try and paint it. I also am sure that you mix it with some judeochristian slave morality nonsense.

You are such a putz.

First of all, you are the putz.

If we remove these "tax credits" corporations and people get, then the tax rates can be reduced. We won't have corporations like GE making a healthy profit, and getting tax dollars both. Not all corporations are "evil" like you wish to imply, but are doing what is best for the shareholders almost anytime they make a decision. That includes moving manufacturing to other counties to avoid the 35% taxation and regulations.

[FuzzyLumpkins]

First of all, you are the putz.

If we remove these "tax credits" corporations and people get, then the tax rates can be reduced. We won't have corporations like GE making a healthy profit, and getting tax dollars both. Not all corporations are "evil" like you wish to imply, but are doing what is best for the shareholders almost anytime they make a decision. That includes moving manufacturing to other counties to avoid the 35% taxation and regulations.

I never said they all were. Try again, putz. Trying to do the best for their shareholders..... yeah thats why dividend ratios have plummeted over the last 30 years. You are such a tool in every sense of the word.