Tuesday, October 18, 2011

9-9-9: By and For the Wealthy

Who wrote the 9-9-9 proposal that Cain is pushing? One Rich Lowrie who sat on AFP's (American's for Prosperity) board of advisers from 2005-2008. Well, then we have to ask who are American's for Prosperity? They are a political front group founded by billionaire activist David Koch. They are one of the primary financial forces behind the Tea Party. AFP receives large financial donations from the Koch brothers. Cain has deep ties with AFP.

"Cain's campaign manager and a number of aides have worked for Americans for Prosperity... AFP tapped Cain as the public face of its "Prosperity Expansion Project," and he traveled the country in 2005 and 2006 speaking to activists who were starting state-based AFP chapters from Wisconsin to Virginia."

" Cain's spokeswoman Ellen Carmichael, who recently left the campaign, was an AFP coordinator in Louisiana."(same source as above).

Who is helped by the proposed 999 tax code? Not the lower and middle income. Cain is opposed to a prebate for the 9% sales tax. Recently Cain had this to say about the idea of a prebate, "The last thing we need is to establish another federal entitlement, which the proposed pre-bate would quickly become." So much for the line we keep hearing from his supporters that the poor and middle income consumers would get relief from the sales tax. That won't happen, they can expect to pay their full share of 9% on sales tax.

But the wealthy would get a giant windfall from this tax scheme.

If the "9-9-9" tax plan promoted by Herman Cain, a leading Republican presidential candidate, had been the law of the land last year, Warren Buffett would very likely have paid no income taxes, according to an analysis prepared for Yahoo News and The Lookout by the American Institute of Certified Public Accountants. At most, Buffett would have paid taxes on just 1 percent of his income.

The article goes on to say that Buffett earns most of his income from capital gains, which would be exempted from taxation. It carefully analyzes Buffetts income from 2010 and how much of it would be taxable under the 999 scheme.

7 comments:

Machtyn said...

I guess that's one way to get people rich, make being poor and middle class so bad that there is nothing to do, but go up.

Yeah, that won't work out quite like they would have hoped.

Ohio JOE said...

For the record DanL, even through I stated that I am leaning towards Mr. Cain out of default and even though I have expressed interest in the 9-9-9 plan, I am not convinced the 9-9-9 plan is a majig bullet either. To be blunt, I am interested in 9-9-9 in part because it is a change from the status quo and in part it opens up a much needed discussion on overall tax policy.

"If the "9-9-9" tax plan promoted by Herman Cain, a leading Republican presidential candidate, had been the law of the land last year, Warren Buffett would very likely have paid no income taxes, according to an analysis prepared for Yahoo News and The Lookout by the American Institute of Certified Public Accountants. At most, Buffett would have paid taxes on just 1 percent of his income."

This paragraph suggests that the 9-9-9 plan not only covers income tax, sales tax and corporate tax, it sugguests that the 9-9-9 cover capital gains as well.

With respect, I am not trying to be a smart alec, but it sound like you know some of the more specific details of the plan? Will there be a 9% capital gains tax as well. Haha, should the plan be called 9-9-9-9 instead of 9-9-9. That might not be a bad thing in and of itself actually, but I was wondering if you have the specific knowledge on that aspect to clarify.

Anonymous said...

OJ,

No, there will not be 9% capital gains tax. There will be 0% capital gains tax under 999. That is how Buffett would end up paying, at most 1% federal income tax. He currently gets most of his income from the sale of stocks, which are subject to capital gain taxes. Under 999 there will be no capital gain taxes and so he wouldn't pay taxes on his stock sales.

In and of itself I am not opposed to a cut in capital gains taxes. But in this 999 scheme it is obvious that the code is being set up to benefit the wealthy who invest large amounts, and to place most of the burden on the poor and middle income, who do not have substantial investments and who will be hit hard by the national sales tax. And those poor and middle income will get no relief from the sales tax because there will be no prebate. But the wealthy will get huge relief from capital gains taxes. This is a tremendously regressive tax.

Ohio JOE said...

OK, thanks very much for clarifying that DanL. For the record, I am glad that I now live in a country where the capital gains tax is less than 75% for everybody, but I do agree with you that capital gains taxes should also be more than 0%. Thanks again for clarifying.

Anonymous said...

Sure thing OJ. I really would like to see Capital gains taxes go away, but not if the cut is offset with a big tax increase on those making 50k or less a year.

Anonymous said...

Attached is a link from CNN Red States that shows an article highlighting an OPED that Cain wrote 10 months ago why the introduction of a national sales tax is insanity. He stated 3 points. One major point is that it would be an additional tool for government to use to raise revenue to support their over the top spending. So I wonder what changed Cain's mind?Could it be the Koch brothers??

http://www.redstate.com/streiff/2011/10/17/herman-cain-thinks-9-9-9-is-a-really-bad-idea/

Anonymous said...

Thanks for the link leigh.