If we go back a couple of months on this forum, there was wild enthusiasm for Michelle Bachman. Then came Rick Perry. All along was the thought that Sarah Palin would throw her hat in the ring. Now the "flavor of the month" is Herman Cain.

Cain's a nice enough fellow, probably smart enough to do the job. But he's spent the last week or so flogging his 9-9-9 program for balancing the budget and beginning to reduce the national debt. What is it all about? Why are conservatives so wildly enthusiastic about the man and his proposed fiscal policy? What is 9-9-9? What do we know about it?

• Not a whole lot has been written down about the plan by Mr. Cain. The entire plan is described in 32 bullet points on his website, leaving an awful lot of detail to be filled in or explained by someone.
  
• Cain explains that several noted economists helped him design the plan, except he refuses to say who they are.
  
• The plan is heavily based on the enactment of a 9% European-style VAT tax. Conservatives have been steadfastly against VAT taxes because of the proven pattern that the tax rate escalates upwards consistently.
  
• Cain says that the plan is not regressive. The only problem is that everyone who has attempted to analyze his plan (except Cain) has concluded that taxes on corporations and the wealthy will be reduced with the increased tax burden to be picked up by the lower income classes--a textbook definition of a "regressive tax".
  
• Those that have attempted to "do the arithmetic" with Cain's plan have concluded that if enacted it would actually increase the annual deficits and national debt.
  
• Other than the bullet points on his website, Cain has not proposed to fill in the balnks in his plan. Nor has he agreed to permit any of the unnamed financial advisors who he says assisted him in designing the plan to explain its details.
  
• One of the bullet points on Cain's website explaining the 9-9-9 plan says, "Amidst a backdrop of the economic boom created by the Phase 1 Enhanced Plan (presumably after he is elected POTUS), I will begin the process of educating the American people on the benefits of continuing the next step...."

Where is the conservative outrage in response to this plan from this candidate? There are enough non-conservative...liberal actually...elements in this plan that if it were proposed by a Democratic candidate, the conservative right would respond with indignation and outrage.

But that's not happening with Herman Cain. In fact, he seems to be gaining in popularity. I'm baffled at the absence of conservative outrage over the economic plan proposed by this candidate. Why? Is anyone paying attention to what is being said, to what he's proposing? Unbelievable!

Cain's website will be a little more specific on the 9-9-9 farce, as soon as Rich Lowrie explains it to him.

I'm at a loss at trying to understand your call for "conservative outrage". Even with all your words above, your reasoning is eluding me.

Where has the "consumption tax" been morphed into a VAT tax?

You've completely lost me on this one.

Maybe there is no "outrage" because there is nothing "outrageous" about a federal tax plan that people can understand, is fair, and eliminates the current DISASTER of a tax code that has crippled us into the mess we are in now.

As for VAT, that's not what Cain proposes. A national sales tax of 9% at the cash register is not the same as VAT added every step of the way (and hidden) before the product got to the store.

In another thread, someone metionad about how much money you'd pay in taxes to buy a car under the 9-9-9 plan.

It got me thinking.

If I buy a car for $30,000 (bottom line) and I sell it years later for $10,000, there's a big difference between a VAT and a sales tax.

Under a sales tax, I have to pay $900 on that $10,000 sale.

Under a VAT, I pay nothing since I sold the car for less than I paid for it. VAT, for those who don't know, means Value Added Tax. In short, if I buy something for $100 and sell it for $120, I pay tax on the $20 - the 'value added'.

Originally Posted by ilovetv

Maybe there is no "outrage" because there is nothing "outrageous" about a federal tax plan that people can understand, is fair, and eliminates the current DISASTER of a tax code that has crippled us into the mess we are in now.

As for VAT, that's not what Cain proposes. A national sales tax of 9% at the cash register is not the same as VAT added every step of the way (and hidden) before the product got to the store.

Bingo

Originally Posted by djplong

In another thread, someone metionad about how much money you'd pay in taxes to buy a car under the 9-9-9 plan.

It got me thinking.

If I buy a car for $30,000 (bottom line) and I sell it years later for $10,000, there's a big difference between a VAT and a sales tax.

Under a sales tax, I have to pay $900 on that $10,000 sale.

Under a VAT, I pay nothing since I sold the car for less than I paid for it. VAT, for those who don't know, means Value Added Tax. In short, if I buy something for $100 and sell it for $120, I pay tax on the $20 - the 'value added'.

Yesterday in explaining Cain's 9-9-9 plan on t.v., he or another person speaking for it said that the 9-9-9 plan does not call for the 9% sales tax on used cars or goods. It's only on new purchases.

Originally Posted by djplong

In another thread, someone metionad about how much money you'd pay in taxes to buy a car under the 9-9-9 plan.

It got me thinking.

If I buy a car for $30,000 (bottom line) and I sell it years later for $10,000, there's a big difference between a VAT and a sales tax.

Under a sales tax, I have to pay $900 on that $10,000 sale.

Under a VAT, I pay nothing since I sold the car for less than I paid for it. VAT, for those who don't know, means Value Added Tax. In short, if I buy something for $100 and sell it for $120, I pay tax on the $20 - the 'value added'.

Cain's plan is not a VAT though. It's a Federal Sales Tax. I guess you would pay the $900 bucks extra to the Feds. But just to remind you, you've only paid 9% on your income, so you have more money available to you.

Originally Posted by djplong

In another thread, someone metionad about how much money you'd pay in taxes to buy a car under the 9-9-9 plan.

It got me thinking.

If I buy a car for $30,000 (bottom line) and I sell it years later for $10,000, there's a big difference between a VAT and a sales tax.

Under a sales tax, I have to pay $900 on that $10,000 sale.

Under a VAT, I pay nothing since I sold the car for less than I paid for it. VAT, for those who don't know, means Value Added Tax. In short, if I buy something for $100 and sell it for $120, I pay tax on the $20 - the 'value added'.

Not quite accurate...the car would have cost you a lot more than $10,000 to buy it in the first place.

Each of the following classes of businesses would have added 9% to the value they added to the car you bought (the tax would be paid on the difference between what they paid for raw materials and parts to make their product or component and what they sold their product for)...

• All the raw materials suppliers (steel, copper, aluminum, plastic, glass, etc.)
• The suppliers who manufactured the parts that went into the car (engine, transmission, electronics, wiring harnesses, carpeting, seats, trim, etc.)
• The car company that assembled the car
• The transporter that hauled the car from the assembly plant to the dealer
• And the dealer himself.

At each level, the supplier or sub-assembly contractor pays the 9% tax on the difference between what he paid for the parts and raw materials he used to make his product and what he sold it for to the next level in the supply chain.

So as you can see, it's a virtual certainty that you would have paid a lot more than $10,000 for your car. By the way, that's one of the criticisms of the VAT tax--the tax simply gets burined in the cost of the products purchased and no one is particularly sensitive to the actual tax rate itself.

Originally Posted by Villages Kahuna

Not quite accurate...the car would have cost you a lot more than $10,000 to buy it in the first place.

Each of the following classes of businesses would have added 9% to the value they added to the car you bought (the tax would be paid on the difference between what they paid for raw materials and parts to make their product or component and what they sold their product for)...

• All the raw materials suppliers (steel, copper, aluminum, plastic, glass, etc.)
• The suppliers who manufactured the parts that went into the car (engine, transmission, electronics, wiring harnesses, carpeting, seats, trim, etc.)
• The car company that assembled the car
• The transporter that hauled the car from the assembly plant to the dealer
• And the dealer himself.

At each level, the supplier or sub-assembly contractor pays the 9% tax on the difference between what he paid for the parts and raw materials he used to make his product and what he sold it for to the next level in the supply chain.

So as you can see, it's a virtual certainty that you would have paid a lot more than $10,000 for your car. By the way, that's one of the criticisms of the VAT tax--the tax simply gets burined in the cost of the products purchased and no one is particularly sensitive to the actual tax rate itself.

Herman Cain's proposal is not a VAT. It is a Federal Sales Tax. Your analysis does not apply.

Originally Posted by Villages Kahuna

If we go back a couple of months on this forum, there was wild enthusiasm for Michelle Bachman. Then came Rick Perry. All along was the thought that Sarah Palin would throw her hat in the ring. Now the "flavor of the month" is Herman Cain.

Cain's a nice enough fellow, probably smart enough to do the job. But he's spent the last week or so flogging his 9-9-9 program for balancing the budget and beginning to reduce the national debt. What is it all about? Why are conservatives so wildly enthusiastic about the man and his proposed fiscal policy? What is 9-9-9? What do we know about it?

• Not a whole lot has been written down about the plan by Mr. Cain. The entire plan is described in 32 bullet points on his website, leaving an awful lot of detail to be filled in or explained by someone.
  
• Cain explains that several noted economists helped him design the plan, except he refuses to say who they are.
  
• The plan is heavily based on the enactment of a 9% European-style VAT tax. Conservatives have been steadfastly against VAT taxes because of the proven pattern that the tax rate escalates upwards consistently.
  
• Cain says that the plan is not regressive. The only problem is that everyone who has attempted to analyze his plan (except Cain) has concluded that taxes on corporations and the wealthy will be reduced with the increased tax burden to be picked up by the lower income classes--a textbook definition of a "regressive tax".
  
• Those that have attempted to "do the arithmetic" with Cain's plan have concluded that if enacted it would actually increase the annual deficits and national debt.
  
• Other than the bullet points on his website, Cain has not proposed to fill in the balnks in his plan. Nor has he agreed to permit any of the unnamed financial advisors who he says assisted him in designing the plan to explain its details.
  
• One of the bullet points on Cain's website explaining the 9-9-9 plan says, "Amidst a backdrop of the economic boom created by the Phase 1 Enhanced Plan (presumably after he is elected POTUS), I will begin the process of educating the American people on the benefits of continuing the next step...."

Where is the conservative outrage in response to this plan from this candidate? There are enough non-conservative...liberal actually...elements in this plan that if it were proposed by a Democratic candidate, the conservative right would respond with indignation and outrage.

But that's not happening with Herman Cain. In fact, he seems to be gaining in popularity. I'm baffled at the absence of conservative outrage over the economic plan proposed by this candidate. Why? Is anyone paying attention to what is being said, to what he's proposing? Unbelievable!

I think you need to look closer at the "32 bullet points". Among others (no Death tax, no Capital gains tax, no Payroll tax, no tax on repatriated profits) are 3 main 9% taxes as such-9% personal income tax, 9% business tax, and 9% national sales tax...Very specific detailed points!


http://www.hermancain.com/999plan

Originally Posted by RichieLion

Cain's plan is not a VAT though. It's a Federal Sales Tax....

Actually, Richie, a sales tax puts more money into the government's pockets and results in much higher prices to consumers than a VAT tax. In that sense, I hope you're wrong and that Cain's plan really is a VAT tax.

Let's take a really simple example. A fabricator buys steel from a steel mill, fabricates a product, and sells it to a consumer. Let's assume that each company in the supply chain marks up his costs by double to create a selling price for his product.

VAT Tax Example

• Steel company buys taconite from mining company for $1,000 (that includes $90 in VAT tax buried in the selling price)
• Steel mill produces and rolls steel and sells it to the fabricator for $2,000 (that includes $180 in VAT tax included in the selling price of the steel)
• The fabricator produces a product and sells it to a consumer for $4,000 (that includes $360 in VAT tax)
• Total VAT tax paid to provide the product to the end-user is $630.

Sales Tax Example

• Mine sells taconite to steel company for $1,000. Steel company has to pay $1,090 including a 9% sales tax of $90
• The steel company produces and rolls steel and sells it to the fabricator for $2,180. The fabricator has to pay 9% sales tax on the purchase steel, a total of $2,376
• The fabricator sells his product, made with the steel, to a consumer for $4,752. The consumer has to pay a 9% sales tax of $428, bringing his purchase price to $5,180
• Total "sales taxes" collected in the process of producing and selling this product to an end-user = $714

Many have described the plan Cain sets forth as a VAT tax. If it is actually a sales tax as you assert, the total taxes paid to the government would be $714, about 13% more than if the tax regime was a VAT tax. More importantly, the consumer would have paid a purchase price of $5,180 instead of $4,000 under the VAT tax regime, almost a 30% premium in purchase price.

Originally Posted by Villages Kahuna

Actually, Richie, a sales tax puts more money into the government's pockets and results in much higher prices to consumers than a VAT tax. In that sense, I hope you're wrong and that Cain's plan really is a VAT tax.

Let's take a really simple example. A fabricator buys steel from a steel mill, fabricates a product, and sells it to a consumer. Let's assume that each company in the supply chain marks up his costs by double to create a selling price for his product.

VAT Tax Example

• Steel company buys taconite from mining company for $1,000 (that includes $90 in VAT tax buried in the selling price)
• Steel mill produces and rolls steel and sells it to the fabricator for $2,000 (that includes $180 in VAT tax included in the selling price of the steel)
• The fabricator produces a product and sells it to a consumer for $4,000 (that includes $360 in VAT tax)
• Total VAT tax paid to provide the product to the end-user is $630.

Sales Tax Example

• Mine sells taconite to steel company for $1,000. Steel company has to pay $1,090 including a 9% sales tax of $90
• The steel company produces and rolls steel and sells it to the fabricator for $2,180. The fabricator has to pay 9% sales tax on the purchase steel, a total of $2,376
• The fabricator sells his product, made with the steel, to a consumer for $4,752. The consumer has to pay a 9% sales tax of $428, bringing his purchase price to $5,180
• Total "sales taxes" collected in the process of producing and selling this product to an end-user = $714

Many have described the plan Cain sets forth as a VAT tax. If it is actually a sales tax as you assert, the total taxes paid to the government would be $714, about 13% more than if the tax regime was a VAT tax. More importantly, the consumer would have paid a purchase price of $5,180 instead of $4,000 under the VAT tax regime, almost a 30% premium in purchase price.

Pretty sure that you are correct. Mr. Katz has voiced the same concerns. Then add this: 9% national sales tax AND 7+% state sales tax here in Ohio=16% total!

A good link is below.

"“Relative to regression, no, it is not,” Cain said. “If you take a family of four at $50,000, and $25,000, start with the fact that if they're getting a paycheck, they pay 15.3% in the payroll tax. That 15.3 becomes 9 percent. That's a 6 percentage point differential.”

Cain explained that the proposed 9% national sales tax would only be applied to new goods that change hands and not to the sale of used goods. Asked on CBS’ “Face the Nation” what the impact of that would be on the auto industry, Cain said it would lead to the depletion of the existing inventory of used cars. "And, eventually, people are going to start buying new cars. So that's not a big negative," Cain said.

Cain also insisted that, notwithstanding the new additional 9% national sales tax, the poor would not pay more in taxes. Cain reasoned that the lower individual income rate of 9% under his proposal would save lower-wage taxpayers money relative to the amount of payroll taxes they currently pay. Specifically, because of the differential between the current 15.3% payroll tax rate and his proposed 9% flat individual income tax rate, Cain said "9-9-9" would generate savings on individual income taxes for all taxpayers.

“That 6 percentage point difference makes up for a lot of the sales tax that people will have to pay,” Cain said on CNN.

When asked by CNN’s Candy Crowley if he thought the plan is fair, Cain pointed out that under his plan, used goods would not be taxed.

“Yes, it does sound fair, because of the other point that I'm about to make,” Cain said. “If they need to buy a car or a home or some hard goods that are used, they pay no taxes. So they have an opportunity for them to leverage their income.”

http://politicalticker.blogs.cnn.com...e-under-9-9-9/

Don't worry your little conservative heads over this one. Herman Cain will NOT be your GOP candidate. Your candidate will be Mitt Romney and Herman Cain will not be anywhere on this ticket.