There are over 1 Trillion Credit Card/Debit Card and Check payments each year. Only a TINY percent will ever become barter. Besides, no one collects sales tax at garage sales today, so person to person exchanges like that will continue and not be taxed, but that won't affect the vast majority of retail sales that would pay the sales tax. All? No. A pretty decent percent? Yes (two daughters as waitresses proved that). That aspect of the plan (among others) is not very well defined. I presume that if it were to become tax law that it would be worked out so there aren't glaring holes.
What you don't seem to understand it that under the Cain plan the motivation to cheat on sales taxes will more than double. So to assume as you have done and continue to do that this will not affect the underground economy is just silly and flies in the face of reason - not that that has ever been a problem for people with your POV. And if the current tax code is full of imperfections - which it is - by what magic are you counting for all of the glaring holes to be removed from the Cain 999 plan before passage and implementation? This is really what gets to me about Republican policy, it always ends with "and then magic happens". Unfortunately, magic never happens.
Agreed. But that (currently tiny) percentage of personal transactions that are not taxed will expand dramatically once people have a $400 billion incentive to transact in that manner. Agreed. You get at least 25% in my experience. Perhaps. I would be most interested in seeing those details; indeed, it is the details that are the crux of the plan.
Nope Because that $400 Billion is spread across 1 Trillion electronic transactions and leave an audit trail. There will always be a reason to cheat on taxes but that doesn't mean that Internet sites like Amazon, or large retail Stores like Kohls, Target, Sears, Belks, Rite Aid etc, or Restaurant chains or Car Dealers or Grocery Stores are going to help people NOT pay their sales tax and since the 1 Trillion electronic payment transactions represent the bulk of the dollar value of our annual retail transactions I find no reason to believe that people will avoid a National Sales tax because the retail estabishments are already routinely audited by the State Tax boards and under-reporting receipts can yield heavy fines. The States already take in more money than the Fed does in Income tax and know how to collect based on sales tax. Of course someone selling illegal products is not going to report the income from sales, just like they don't today, but they can't easily hide the spending, so we don't get all but we would get much more than we do today. 25% of Cash tips, 100% of electronic tips, and my kids got ~75% of tips electronically. As I said though, I'm not for it and I don't think it will get passed even if Cain were to be nominated and then elected. What I've said is that I'm for making our tax system much simpler (equiv of 30 volumes, 250 pages each) and eliminating at least half of the over 110,000 IRS work force, and so yes, I do see a National Sales Tax as part of that strategy (since basically the same tax audit the states use today works for both). However unlike the overly simplistic and quite regressive Cain plan I think that with a few changes the plan could be made progressive. For instance the basic necessities: food, medicine, utilities, maybe the first $20k of a new car purchase and primary homes (purchase or rent) could be exempt. I also think that giving up deductions for children and others you care for should not be tossed out and probably exclude any income from SS or below the poverty line from taxes and while I think we should tax CGs, probably set a nominal amount (~the first $50k or so) to zero and then tier it such that as CG income went up the tax rate would go up.
Agreed, it's easy to track that. But Craigslist and Ebay will continue to help people not pay their sales tax. And if you are buying a $1000 refrigerator, the $90 "craigslist incentive" will be a powerful motivating force. So you don't think financial incentives alter people's behavior? The 25/100% number sounds about right, although bartending most tips seemed to be cash. If simplicity is the goal, just abolish deductions and tax brackets and tax people 30% of any income over $30,000. That's simple, progressive and will greatly reduce both the size of the IRS and the amount of money people spend dealing with taxes.
I don't know how you think eBay and Craigslist will matter. Remember, only new retail sales pay tax. Sales of used products don't count Of course they do, but remember there are two parties in every transaction and you have to modify both of their behaviors. That's why most of the Trillion transactions that occur as they do today will continue to occur as they do today. And the tax boards know this and use a different forumla for bartenders. It's not the only goal though. Taxing spending is a way of capturing a lot of unreported income, and if you leave off the necessities like food, shelter and medicine, it isn't regressive.
So used cars can be resold indefinitely, and tax is paid only once? Why is there unreported income? Because we've had decades to figure out how to get around income taxes. You really think the same thing won't happen with sales tax? You think people are going to be clever about income tax, but will not be able to figure out how to not pay sales tax? If so you're pretty optimistic, IMO. (Google how people buy airplanes, for example.)
From observing the sales tax audits the company I work for has gone through, trust me - someone winds up paying the tax. Even if it's not the end consumer.
In the end it is far better for the company to make the consumer pay though because if they find in your audit that you are $9,000 too low in paying taxes they hit the COMPANY up for the unpaid tax (typically no way to get it from the consumer), and then they get the company for increased Corporate income tax because that $9,000 translates to an under statement of $150,000 in income in a 6% sales tax state. Since audits are often a year or more after the fact that usually involves paying penalties and interest. Which is why there is a strong incentive to not let the consumer skip on the tax because if caught, the company pays through the nose. Arthur
In Cain's plan, apparently so. Nope, most of it is illegal income, done in cash. And large amounts of that requires money laundering and so no, except for criminal enterprises I doubt it is a lot of money. So while I don't expect that the Marijuana growers will report their income anymore than they do today, they will indeed pay their share of sales tax. Nope, because it's not worth it for the majority of small retail purchases that people make and most large purchases are not done in cash, and with our cash reporting requirements that's not likely to change. Nope, it's inherent in the nature of sales tax, that they are just much harder to avoid. And again, buying a plane in a state that doesn't have a sales tax doesn't work when the sales tax is NATIONAL (it's also why states came up with USE taxes). Arthur
. . . I usually buy used stuff . . . . so the 999 plan sales tax won't affect me much anyway . . . BTW . . . I'm one of those 'poor folks'!
Agreed. I've had to go through order entry programs and "lock down" the "Taxable? (Y/N)" field. We have to have proper paperwork to backup any orders that are tagged non-taxable.
Cain said just last night that, if elected, his plan would balance the budget within one year. Anyway, what is the hang-up with the time frame? If the plan has positive economic effects, they ought to become apparent relatively quickly once it's in force, no? Why is one year unreasonable there, and what difference would it make to any point here if it takes two or whatever? And no dispute of that assertion coming from you, either. So, no need to cite anything. The fact that some non-partisan group did its own estimates and that they disagree with Cain's, doesn't imply that Cain didn't make those claims. I just quoted you the text off of Cain's website where he claims a big jump in GDP and employment. You, in turn, quoted exactly that text right back at me in your reply. It is not in dispute. The fact that some non-partisan group contends that said claims are bullshit goes exactly to my point, which is that Cain's claims are a bunch of self-serving bullshit. What I said, was that Cain's 999 plan was loony. Why are you going to such lengths to beat up these transparent strawmen? It doesn't make you look like you're winning. It makes you look like an idiot who can't even follow the conversation. Although, in point of fact, it is also lunacy to think that one can simplify the current tax code to such an extreme without creating many more, bigger problems than you'd solve. Makes sense as a political talking point, maybe, but it doesn't make economic or policy sense. Modern society, and the modern economy, are complex. It is reasonable to expect that an efficient, effective tax code would be relatively complex as well. These are complex issues at stake - the premise that they can all be nicely tied up with some terse bit of policy is nothing more than an assertion of a fundamentalist ideological outlook. So the measure of how "good" or "bad" the tax code is, is... its complexity? Nothing else? Why? Shouldn't the question of complexity necessarily be secondary to first-order concerns like revenue, fairness, impact on various incentives, etc.? Of course, you agree - or you wouldn't be asserting that Cain's very simple proposal is worse than the status quo.
What do those questions even mean? Both of those states would be substantially poorer if not for the sustained federal spending that created entire industries there. But I'm unsure why you're going on about Texas - last I checked, they were close to neutral in terms of federal spending received vs. federal taxes paid.
Apples and Oranges. Balancing the budget is also done with Spending cuts. Because one talks about fiscal years. So the immediate concern is in the first year of adoption. Again, the web site does NOT say that revenue neutrality requires a big jump in jobs and spending, which was your claim and that linkage you claim to income neutrality is NOT on Cain's web site. No, apparently the Tax group I posted agrees with Cain's assertion that it is revenue neutral AS IS. What they disagree with Cain about is the same thing I have been saying: who gets taxed more. Their site clearly shows that Cain's plan is quite regressive. http://taxpolicycenter.org/numbers/displayatab.cfm?Docid=3219&DocTypeID=1 You're childish behavior speaks for itself. No point in stooping to your level. And I didn't make that claim did I? No I didn't. But it could be made much simpler. Didn't make that claim either did I? Nope, but that doesn't mean making the code simpler isn't a worthwhile goal. Didn't say it shouldn't be did I? But again that doesn't mean simpler isn't a worthwhile goal. No, what I mean is I'd rather start from a simple plan like Cains and add only what is needed than our current plan which everyone acknowledges has loopholes hidden in it for the very rich. (I believe you have made that argument yourself) More to the point, what I've been arguing for mainly is a key point that I do agree with Cain on and that is that we should replace much of our current income based revenue with taxes from Sales, but only if the plan's regressive nature are dealt with by excluding essentials such as food, medicine and housing. Arthur
Had to do with this by EF: So I just wanted to know how those "services" were apportioned to those states. I just picked two states and services as an example to understand his point about "utilization of services".
For sure corporate tax and income tax need to be matched - this is the single biggest reason for the 99% and the 1% everyone is talking about. Since corporate tax is largely dictated by global ecomomics, this makes it realy easy to decide on the income tax. Further more as a human being requiring food shelter etc they should get and exemption on the initial 15000 or whatever is required for basic human survival. Robin Hood wouldn't pay our (income)taxes, neither should we.
According to the independent Tax Policy Center, Cain's 999 plan would raise taxes on 84 percent of American households. http://www.huffingtonpost.com/2011/10/18/999-plan-herman-cain_n_1018462.html "WASHINGTON — Herman Cain's 9-9-9 tax plan would raise taxes on 84 percent of U.S. households, according to an independent analysis released Tuesday, contradicting claims by the Republican presidential candidate that most Americans would see a tax cut. The Tax Policy Center, a Washington think tank, says low- and middle-income families would be hit hardest, with households making between $10,000 and $20,000 seeing their taxes increase by nearly 950 percent. "You're talking a $2,700 tax increase for people with incomes between $10,000 and $20,000," said Roberton Williams, a senior fellow at the Tax Policy Center. "That's huge." Households with the highest incomes, however, would get big tax cuts. Those making more than $1 million a year would see their taxes cut nearly in half, on average, according to the analysis. Among those in the middle, households making between $40,000 and $50,000 would see their taxes increase by an average of $4,400, the report said. Those making between $50,000 and $75,000 would see their annual tax bill go up by an average of $4,326. "It's very, very regressive compared to the current system, and that's largely because we're exempting capital gains, and we're taxing your spending with the sales tax," Williams said. "People at the top end don't spend all their money and they get a lot of capital gains, so they are doing pretty well here." - Huffington Post
