From my Friend Sisa,
Let's look at Herman Cains 9 9 9 tax plan. A simple plan from a simple man. This plan proposes that everybody pays 9 percent across the board which seems fair enough right?WRONG! As it stands right now there is currently no federal sales tax, this plan would impose one on everything.... That's right everything including food and clothing. The truth is that most Americans live hand to mouth, paycheck to paycheck. That means that everything they earn is spent to live each month, each year, with little or no savings. That means that poor and middle class families would essentially be paying a 9 percent tax on their income and an additional 9 percent tax on that same income as it is spent on goods and services to sustain themselves. The wealthy or the top 2% as they earn far more than it costs to sustain themselves have the ability to save and even though they would be paying the same tax rate they would be paying it on far less of their income. Why?As it stands we all compete for the same goods and services that sustain us. Can we not all agree that the price of a loaf of bread or a box cornflakes is pretty much equal across the board for brand name items as well as non brand name items. That means means that Wonder brand bread and Kellogs brand corn flakes cost the same at store A as at store B, and Great Value bread and Great Value cornflakes cost the same at the Wal-Mart on one side of town as the other. Therefore a family that earns $50,000 a year and spends $50,000 a year (hand to mouth) is taxed twice at 9% on 100% of their income giving them an effectual tax rate of 18%.
($50,000 at 9% $4,500 on income and $50,000 at 9% = $4,500 on purchases. $4,500+$4,500
$9,000 total tax $50,000 income= 18%)
A family who earns $250,000 a year and spends the same $50,000 a year to sustain themselves pays the same tax rate however they pay it on a smaller portion of total income therefore their effectual tax rate would be 10.8%.
($250,000 at 9%$22,500 on income and $50,000 at 9%
$4,500 on purchases. $22,500+$4,500= $27,000 total tax$250,000 income= 10.8%)
Even if they spend twice as much,$100,000 on goods and services to sustain themselves their effectual tax rate would still only be 12.6%.
($250,000 at 9%$22,500on income and $100,000 at 9%
$9,000on purchases.$22,500+$9,000=$31,500 total tax/$250,00 income =12.6%)
In fact the only way the effectual tax rate would be the same 18% would be if the family that earned $250,000 a year spend it ALL on goods and services... That's a lot of bread and cornflakes. Furthermore the only way the family that earned $50,000 a year could have an effectual rate of 12.6% would be if they only spent $1,800 on goods and services to sustain themselves.... Or pretty much starve.
Simple plan for a simple man? More like a simple plan for a simpleton. THIS PLAN WOULD DO NOTHING MORE THAN PLACE EVEN MORE OF THE BURDEN ON THE BACKS OF THE MIDDLE CLASS AND POOR WHILE ALLOWING THE WEALTHY TO SIMPLY GET RICHER FASTER!