" Even allowing for the poorly thought through promises made on the campaign trail, Mr. Cain's tax plan stands out as exceptionally ill conceived." See if you agree.....
**Phase One of Cain's tax plan is seen as an intermediate step to an overhaul of the U.S. tax system and a means of jump starting growth. In Phase One
The maximum rate for individual and business taxes are reducede from 35 % to 25 %. There is no mention of reduction sin the tax rates for those now in the 10%, 15 % or 25 % brackets, so only people in the 28 %, 33 % and 35 % will receive a tax cut.
ONLY 4 % OF U.S. TAX PAYERS PAY TAXES AT THESE RATES
As for corporations, the plan would primarily benefit those with revenue exceeding $ 1 million/ year, because they account for 98.7 % of all Chapter C revenue. ( Chapter C corporations are different from regular corporations as shareholders pay taxes as individuals). All other business, like sole proprietorships, S Corporations ( small businesses )and partnerships would not benefit at all, because they are not taxed at corporate rates. However, these entities include 92 % of all businesses.
Additionally, all taxes on profits earned by multinationals abroad would be eliminated. The 50 largest corporations in the U.S earned half of their profits overseas. The actual benefit to these companies would be even greater because some companies like Phizer and Philip Morris derive 100 % 0f their gross profits overseas.
Finally, the plan would abolish all taxes on capital gains which generate $ 100 billion in federal revenues. Two-thirds of all capital gains are reported from those whose incomes exceed $ 1 million annually.
The above is only Phase One
***In Phase Two, the payroll tax is eliminated, causing a tax loss of $ 800 Billion annually. The estate and gift taxes are also eliminated further reducing taxes on the wealthy.
Finally, the 9-9-9 plan would be implemented;
The 9 percent rate on personal and business income would apply to a very different tax base from that today. For example:
For individuals, the tax would apply to ALL gross income, with no deductions whatsoever, except for charitable deductions.. There would be no personal exemptions , either. So, the 47 % of all U.S. filers who now pay NO taxes, would pay 9 % of their total income. Since the Earned Income Tax Credit would also be abolished, these folks would have no deductions and would pay the full 9 %.
Everyone would pay 9 % of all purchases for food, medicine, medical care, rent, home and auto purchases...........causing the poor to pay much more in taxes and raising the Cost of Living 9 % for everybody.
The business tax in the Cain Plan would bear no resemblance to the current plan. The tax , for example, would apply to gross sales less dividends paid. No deductions for expanses like wages.
Here's the kicker...
The above 9-9-9 plan is a transition to Phase 3 which is the Fair Tax. that replaces all federal taxes with a 30 % sales tax on all goods and services.
The Cain Plan represents a huge tax cut for the wealthy at a time when federal revenue is at an historical low and when the economy's fundamental problem is a lack of aggregate demand. The plan
** Increases the budget deficit without stimulating demand because rich people are already spending as much as they want and wouldn't spend more if their taxes were totally eliminated.
** The poor and middle class will unquestionably pay more. With no tax on capital gains, the rich would pay almost nothing, while raising taxes on everybody else........particularly those who currently pay no taxes at all.
"At a minimum, the Cain Plan is a distributional monstrosity. The poor would pay more, while the rich would have their taxes cut with no guarantee that economic growth would increase and good reason to believe that budget deficits would increase"
Jack Kemp had a Doctorate in finance. Bartlett was one of his key guys. I would hate to campaign against Barack Obama with this plan while the hedge fund guys received million dollar bonuses and the folks were camped out in the downtowns of America
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