The voo-doo-doo 9-9-9 economic tax plan for a third world America.
Tag sales, yard sales, and rummage sales all will be a part of the “vibrant” economy under the voo-doo-doo 9-9-9 economic tax plan of Herman Cain. One component of the plan, the 9% national sales tax is unlike a sales tax levied in many states because it includes taxing key essentials of living for the working poor: food, clothing, and shelter.
Cain gives us this illogical view for a family of four (assume 2 parents and 2 children) making ends meet living on $50,000 using the mathematic scenario noted in this piece:
So this working family will in Cain’s description have a net income of $45,500 net after the first 9% income tax bite.
Let’s work the numbers! If they spend $163.50 per week on groceries (that’s $150 careful planned challenging shopping for a balanced diet plus the 9% Cain sales tax), they will have an annual food cost of $8,502 (zero calories from the 9% tax total of $702) leaving them with $36,998 cash on hand. Now let spend $847 per month in rent for two-bedroom flat with $75 electric per month and $300 average heating for six months for an annual cost of $12,864. Now we’re sitting on $24,138 cash on hand which will pay for heath insurance and medical out of pocket costs of $500 month, a used vehicle car loan of $300 month, and gas costs of $50.00 a week to leave $11,938 cash on hand. Assuming that the two kids are school age, the annual fees paid for before- and after-school care for both would be $7,696 (tough luck if you have an infant), reducing our cash on hand to $4,242. Assuming $1,500 annually for dental and eye out of pocket is reasonable as long as no one needs a root canal or high cost prescription glasses, leaves us with $2,742 cash on hand or a whopping $52.73 per week to buy clothing, shoes, school supplies, furnishings, do laundry, get haircuts, any tolls or parking, and minor incidentals. Oh, kiss off matching that 401k or putting a couple grand aside in the annual IRA contribution or college fund (What college fund?); this family is just a decimal point away from economic disaster if any little thing goes wrong.
But Herman Cain has advice for us to save the possible $4.75 per week 9% tax bite on this last bit of “expendable” cash - one can avoid the taxes by purchasing used goods!
By the way if a family of four is living on $25,000 (basically two minimum wage earners), Cain just tells us to "just cut these numbers in half!" Cheaper high calorie food, skipping health care, a one-bedroom place, and a few other thrifty tricks along with many visits to yard and rummage sales ought to do the trick.
Cain’s insane plan also does little to build an economy presently based on consumer spending and yearning to rebuild manufacturing if its general premise is that an appreciable segment of society must resort to and apparently are expected to purchase used goods at the margins of society.
Herman Cain’s 9-9-9 plan is the first tax scheme floated in recent times that instead of either a conservative supply-side goal (which didn’t work) or a liberal economic justice vision that purported to lift all boats, sinks most boats. Its removal of the payroll tax for Social Security and Medicare along with its onerous shifting of taxes agressively and regressively down the economic ladder would mire this country in generations of rapidly growing poverty with far fewer social services. It is a plan for a third world America.