Is Herman Cain a liar or has he been misled regarding his 9-9-9 concept?
IS HERMAN CAIN A LIAR OR HAS HE BEEN MISLED REGARDING HIS 9-9-9 CONCEPT?
During interviews, Mr. Cain has used the example of a person earning $50,000 per year.
1. The employee with not pay the 15.3% Social Security and Medicare taxes upon those earnings.
2. Each employee will pay a flat 9% income tax on those earnings.
3. All purchases of new services and products will be assessed a 9% national sales tax (NST).
4. Corporations will pay a flat 9% tax
His rhetoric includes that the employee will save 6.3% (15.3 less 9) and will have those savings to pay for the 9% national sales tax (NST) on a mix of used (un-taxed) and new purchases.
His presentation is good. The substance is inane and he, eventually, should be extremely embarrassed.
First, an employee pays a total of 7.65% for Social Security (6.20%) and Medicare (1.45%), thus his statement that an employee will save 15.3% is an outright lie or he is parroting an outright lie given to him by his advisors.
He appears to have included the employer’s portion, which is an additional 7.65%.
No one, yet, has suggested that he may be misleading the People. That is very strange. Eventually, when he is confronted, he might suggest that the concept assumes that employers will pass on the savings to the employees. Yeah! Is anyone looking for a bridge to buy?
Regarding the 9% national sales tax, Mr. Cain said that nothing would be exempted, not even food.
This would be a boon for the excess of existing (previously owned) homes for sale, since, whereas new construction would be subject to the 9% NST, existing homes would not be assessed the tax.
Of course, this would be devastating for the new construction industry, until the supply of existing homes was exhausted. Construction labor would be adversely affected.
The immediate effect upon automobile production would be negative, since the 9% would be added to new care purchases, whereas used cars would not be assessed this tax. The pricing of used cars would go up, due to the demand, and, at some point, the negativity of the 9% NST would be balanced by the higher used car pricing.
Thus, the overall cost of new and used cars would go up, thereby exacerbating the CPI (Consumer Price Index). New car production would decrease, during the early stages, thereby causing layoffs at automobile producers and ancillary industries.
Those workers earning between $25,000 and $50,000, who were not paying ‘federal income taxes’, would pay an additional 1.35% (9 less 7.65) of their wages and would pay the 9% NST on purchases of new goods and services, thus they would be, monumentally, worse off than under existing taxation policies. This would result in even weaker economics.
As an example of the upper-end of income recipients, I will use a hedge fund manager with an income of one billion dollars, who should be paying federal income taxes at the 35% rate, but, due to Congress’s acquiescence, currently pays only 15%.
Under 9-9-9, this person would pay a federal income tax of $90 million. Assuming this fund manager spends $50 million for the purchase of new goods and services, he or she will pay a NST of $4.5 (9% of 50) million. As a result, the total taxes paid would be $94.5 million or 9.45% of his or her income. Therefore, even at the ridiculously low rate of 15%, this manager would have a savings of $55.5 (150 less 94.5) million
Corporations would pay 9% corporate taxes on its ‘gross’ income. This additional cost would be passed on to the consumers of the goods and services produced.
CONCLUSION: This 9-9-9 concept appears to paint an extremely unattractive canvas, with the determination yet to be made as to whether Mr. Cain knew he was lying or he was used as the conduit to the lie.