FoxNews: Cain Adds to ‘9-9-9’ Plan, Angering Unions

[Larry]

Why does the working class join in the attacks against those in unions?

Recall reading a joke, a few months ago.

A CEO, a Tea Partier, and a union guy are in a room. On the table in front of them is a plate, with a dozen cookies.

The CEO takes 11 of the cookies, and turns to the Tea Partier.

"Watch that union guy. He wants half of your cookie."

[Hubbs]

You are correct. The actual number, if you total income tax and sales tax, would be 17.2%.

No, it wouldn't, unless you assume that every worker in the United States is a complete and total idiot and will go out of their way to make sure to only buy things that are taxed. Oh, and if you also assume that when employers pay the de facto 9.9% payroll tax, it doesn't count as income taken from the worker (because that would automatically bring your number down to 16.2%), but when you want to talk about how workers are screwed by this plan, it conveniently does count. Gotta stay on message.

Since the employee loses 9% to the IRS when he gets paid, the "9%" sales tax only gets 9% of 91% of his pay, or 8.2% of his pay.

Again, assuming every worker is dumber than a rock. And that you get to apply your 9.9% tax only when you choose.

OTOH, because the corporate income tax hits 9% of whatever's in the bank before the employee gets paid, that "9%" tax is actually a 9.9% tax.

My goodness! You mean that there's a 9.9% tax that you ignored literally one sentence ago?

Yes, he "added" that exemption later.

But, still. Let's assume that there's no sales tax when you buy a used home.

It must be a real struggle to "assume" something that he's always said.

The bank that holds your mortgage, has to pay 9% "corporate income tax" on the money you pay them. It's income, (to them), but they aren't buying anything from any other corporations, so they don't have any deduction to make the income nontaxable. Just like the landlord collecting rent, they have money coming in, and the money doesn't go out anywhere, so it must get taxed, right?

You mean to tell me that this man is going to tax a business's income? Now I can see why you're attacking the plan. We don't have any such tax now, and the tax will clearly be passed through to consumers. And we want to minimize that problem, right?

1) You're talking about the sales tax, and not the corporate income tax.

Yes, in the section of my post in which I was talking about how a worker on a $30,000 salary spends his money, I was indeed talking about the sales tax.

Remember? The corporation gets taxed 9% of all the money they take in, minus whatever they purchased from another US corporation.

I know. Horrible, isn't it? How that 9% has to somehow be accounted for in order for any business to be profitable?

2) Right, if the employee invests his money, there's no tax. If he never spends it.

Look, you're obviously really, really committed to the total falsehood that there aren't giant exemptions to the sales tax, like, oh I don't know, an entire freakin' house. But just because you want the sales tax to apply to everything doesn't mean that it actually does.

3) But let's assume that you're right. Let's say that we've modified his corporate income tax so that "gross income" now means "gross income, but not counting income from customers making loan payments, or rent payments, or buying used things."

That's quite literally the exact opposite of what I said, because perhaps my most important point is that the total tax on all business income is dramatically reduced by this plan. But I can quite clearly see that you're rolling, and as we all know, I'm legally bound to Forget It if you are indeed rolling. I can't wait until you tell us about how it wasn't over when the Germans bombed Pearl Harbor.

Notice how the clean, simple, "no exceptions" tax proposal is starting to proliferate exceptions, already?

You mean the ones that are, and have been, readily available on Cain's website? Just like they were last week, and the week before? The only exception that might be new has been the "9-0-9" policy. He claims it's been there the whole time. I'm skeptical of that, but we'll see if he produces any evidence to back that up.

By the way, I can't believe that I'm once again finding myself in the position of mounting an all-out defense of a plan that puts me on the fence, this time not because I hadn't had enough time to consider how it would affect the economy, but rather because I think the hidden 9 will be the death of this plan. And yet I find myself sounding like I might as well be Herman Cain himself because, once again, the attacks are so full of errors and mistakes peddled as absolute truths that merely applying basic reasoning and analysis puts me in the hardcore Cainiac category when compared to what I'm arguing against.

Just to be clear: I think the 999 plan is DOA so long as there's a "fourth 9" in the form of a de facto payroll tax. And yet I'm finding myself in these types of arguments. This is one of the more surreal experiences I've had in the Tailgate.

Here's another one of those "gotchas", possibly.

Godfather's Pizza buys tomato sauce from Hunts. Does Hunts collect sales tax?

Here in Florida, they don't. The rule is that sales tax only applies when the finished good is sold to the retail purchaser.

Now, I assume that the reason he's putting a 9% "corporate income tax" on anything that's imported, but not on things that are purchased in the US, is because the items that are purchased in the US, have the 9% sales tax on them. It's to keep imported goods from gaining a 9% price advantage over American goods.

But that only makes sense if things that are sold from one company to another, are subject to the sales tax.

And there's a problem with doing things that way. I'll illustrate, using the computer store I used to work in as an example, of the problem that taxing every change of hands creates.

HP makes a printer. Sells the printer to Acme wholesalers. (And collects sales tax.) Acme sells the printer to Larry's computer store. (And collects sales tax.) Larry sells it to a customer. (And collects sales tax.)

HP makes another printer. Sells the printer to Wal Mart. Wal mart ships it to a Wal Mart warehouse. Then they ship it to a Wal Mart store. Then they sell it to a customer (and collects sales tax.)

The Larry printer has been taxed three times. The Wal Mart printer has been taxed twice.

If you tax something every time it changes hands, then you give a (in this case) 9% price advantage to any company that's big enough to count as two layers of the distribution chain.

This honestly makes me think that you haven't even read the plan that you're so vehemently against that you're willing to completely abandon your very best personal characteristics for the sake of your argument.

The sales tax doesn't apply when one American business makes purchases from another. This has been part of the 9-9-9 plan from day one. Your assumption ignores an alternate possibility: That Cain simply wants to make American businesses more competitive. Does that amount to a 9% tariff? Yes. Do I, a staunch libertarian, have a problem with that? No, because I think the "stock" libertarian stance on international trade is, to put it kindly, underwhelming. Free trade is only a good thing under certain circumstances. These circumstances do not currently exist with many of our trade partners. China is the worst offender, but there are others, including Japan. Without those circumstances, completely free trade is a bad idea, and tariffs actually make sense. (Yes, I realize that the de facto 9% tariff would apply to all imports. Ideally, I'd like our "good" free trade partners to get exemptions. But that's a relatively minor part of the entire plan.)

OTOH, if you don't tax every sale, then

a) You're getting further and further from the concept of a low tax, but it's on everything.

The tax was never supposed to be on everything, a fact I've repeatedly pointed out to you and a fact that's readily available on his site. Go ahead, read it:

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

It won't bite. I promise.

And you open up more ways people can cheat.

Please explain your ways to cheat.

If you assume that lots of things people spend money on will be things that are exempt from the tax, but Cain just hasn't mentioned that they're exempt. And if you assume that those things are exempt from the corporate tax, too.

You're right, I forgot two important factors. First, despite the fact that Cain has said roughly 7,396 times that used goods are exempt from the national sales tax, we have to pretend that every single thing you'll ever buy is actually subject to the national sales tax. We also have to pretend that any time Cain tells you that he's explained his exemptions over and over again, he's lying. The more times he explains, the more times he's lied! It's simple science. Also, children, remember that in LarryLand, businesses have to account for a never-before-seen 9% income tax, but they don't have to account for their current income tax that's a much higher rate and features thousands of loopholes that can only be utilized by paying a team of lawyers hundreds of thousands of dollars, which results in an effective tax-and-compliance rate that's above 9% for the vast majority of businesses, and actually punishes small- and medium-sized businesses the most. In other words, in LarryLand, we can complain about the 9% corporate tax rate in the 999 plan, while simultaneously pretending that the current higher income tax doesn't even exist! Isn't LarryLand fun, kids?

Uh, for one thing, the 2% increase you're talking about is a tax that businesses pay. That's the businesses share of the payroll tax. (The rest of the increased taxes on labor are paid by the employee.)

So, just to be clear, your position is that the hidden 9% payroll tax is essentially paid by the employee when it's time for you to complain about how Cain's plan screws workers, but that very same hidden payroll tax is paid for by businesses when it's time for you to complain about how this is going to raise costs for businesses. Right?

Please, tell me which taxes that businesses pay, that Cain is drastically reducing.

Oh, I don't know, income taxes? I know, I know, the only business in the United States is GE, and GE didn't pay any income taxes last year, so therefore no businesses pay the income tax. Clearly a business paying taxes in nothing more than a quaint hypothetical scenario under the current tax code.

In particular, the tax that businesses are paying, right now, that's huge, compared to what the business spends on labor?

You mean the one I just mentioned? Yeah, that one. That one would probably qualify.

And while you're at it, could you tell me which compliance costs will generate these huge reduction in compliance costs?

Probably these compliance costs:

"For business and self-employed individuals, the cost of complying with the tax code is even more severe. According to Olson's report, TAS estimated the cost of complying with corporate income tax requirements in 2008 at $163 billion or 'a staggering 11 percent of aggregate income tax receipts.'"

Hopefully that's the end of the debunking portion of this thread.

[Larry]

No, it wouldn't, unless you assume that every worker in the United States is a complete and total idiot and will go out of their way to make sure to only buy things that are taxed.

Or if you assume that the sales tax applies to everything, no loopholes or exemptions.

You know, just like he said. (Before he decided to "revise" his plan, by saying that it wouldn't apply to used things.)

Oh, and if you also assume that when employers pay the de facto 9.9% payroll tax, it doesn't count as income taken from the worker (because that would automatically bring your number down to 16.2%), but when you want to talk about how workers are screwed by this plan, it conveniently does count. Gotta stay on message.

Actually, I wasn't counting the employer's tas at all.

That's why I used the words "income tax and sales tax".

If you include the "corporate tax", then the number becomes 27.7%. (According to the study.27.2, by my math.)

Tell ya what. You want to claim that Cain's sales tax won't apply to everything? Find something that says so..

(Instead of simply fervently wishing for it to be so, loudly calling everybody who doesn't agree with you ignorant, and telling them to read a document that they pointed out to you (because you hadn't read it), and that doesn't in any way say what you're claiming.)

My goodness! You mean that there's a 9.9% tax that you ignored literally one sentence ago?

You're right. I ignored it. That's why I specifically stated that I was only looking at the other two taxes.

If you include that third tax, then the number is worse.

(See, that's why I keep actually doing the math for you.)

It must be a real struggle to "assume" something that he's always said.

No, actually, that was another one of his "revisions". The ones he keeps coming out with, every time people actually pay attention to his previous versions.

Which is one of my points. See, he hasn't even finished writing down his clean, simple, foolproof, tax plan, the one that's simple to comply with and guaranteed fair, because it applies to everything, with no exceptions, keeps growing exceptions.

You mean to tell me that this man is going to tax a business's income?

No, CAIN SAYS HE'S GOING TO TAX A BUSINESS'S INCOME. I quoted the part of his own web page that says so, gave you a link to the web page, quoted the relevent portion, and have been spending several days forking out the math, to rub your nose in the fact.

You've responded with vague slogans and loud claims that I'm ignorant.

9% Business Flat Tax

Gross income less all purchases from other U.S. located businesses, all capital investment, and net exports.

You know, if you're going to spend a week claiming that anybody who doesn't agree with your vague, completely unsupported, declarations of wishfullness, is too ignorant to have read a plan that consists of six sentences, then you really should read and comprehend those six sentences.

But, now that I've explained the fast complexity if the one sentence that I've been explaining to you, for the last week, and that you're still continuing to wish away,

Deal with the facts.

I'm a bank. Somebody pays me $1000 for their mortgage.

That's income. It goes on my income tax.

I have to pay 9% of that to Herman Cain, unless I have a corresponding tax deduction that I can use, to make that income "didn't happen".

I didn't buy anything from any business, American or otherwise. I didn't invest any capital. (I invested capital five years ago, when I loaned the customer some money. But I didn't invest any of it, this year.)

Please, tell me, which one of the "oh, I forgot to list that as an exception" exceptions says that the bank won't have to pay taxes on that income, under Herman Cain's "no loopholes, no exceptions" tax overhaul.

Look, you're obviously really, really committed to the total falsehood that there aren't giant exemptions to the sales tax, like, oh I don't know, an entire freakin' house. But just because you want the sales tax to apply to everything doesn't mean that it actually does.

List those giant exceptions. Quoting from Cain's own writings.

I've done it. Multiple times.

You throw vague generalities and run from subject to subject. And call me ignorant.

You want to claim giant exceptions to the sales tax? Your emphasis. Back them up.

So far, what you've produced is a verbal comment in which the candidate changed his previous statements, to say that it won't apply to used houses and used cars.

That's it.

(And I've even pointed out how even that flip flop, would have a devastating effect on our economy. Again: If the price of new housing suddenly has an artificial 9% increase in price, (and it's actually more than 9%, because he's also going to increase the price that the builders pay for labor. But let's pretend that his sales tax is the only tax, for this discussion.), but the price of used housing doesn't go up, then what kind of effect does that have on the construction industry?)

----------

And then, after you've detailed all of the giant[/u] loopholes and exceptions that you assume his sales tax will have in it, then please explain to me where you get this (again, completely unsupported) article of faith that the new plan's completely eliminating of all exceptions and exemptions will cause all compliance costs to magically vanish.

That's quite literally the exact opposite of what I said, because perhaps my most important point is that the total tax on all business income is dramatically reduced by this plan.

Of course, that's the most massively ignorant claim you've made all week.

Right now, there is no tax on "all business income". There flat-out isn't one.

Right now, there is a tax on business profit.

Under Cain's plan, there will still only be a tax on profit. But Cain's plan vastly increases the things that get taxed. The biggest one being pointed at, is that he now includes all money paid for labor to be subject to the corporate income tax. (Right now it's isn't.)

Now, right now, there is a tax that an employer pays, on the money that he pays his employees. It just isn't the corporate income tax. It's the employer's portion of the payroll tax. Cain's plan

adds

a "corporate income tax" of 9.9% of every dollar paid to employees, and

eliminates

the "payroll tax" of (7.65% of the amount paid to each employee, up to $106k, and 2% after that.) so Cain's plan doesn't raise the cost of labor by 9.9%, only by 2%.

I've pointed out other examples of businesses where Cain's plan, as described on Herman Cain's web site, would apply to every single dollar the business takes in. (The landlord, and the mortgage lender. They are examples of people who "sell" things, which don't have corresponding "purchases". The landlord "sells" permission to use his house for a year. But he doesn't "buy" any raw materials, to offset his income. Under Cain's plan, he has income, but no expenses.)

Frankly, I assume that if Cain were ever to actually sit down and pay attention to the details of his plan, that he'd exempt at least some of those things.

But then, there goes his grand claim of "it allies to everybody and everything, therefore it's simple" mantra.

And, I'll point out, there's certainly no reason to assume that he'll exempt rental income from his corporate income tax, either. After all, it's been made very clear, from the candidate himself, that yes, he does intend for his corporate income tax to apply to all money spent on labor, even though right now, it doesn't.

So claiming that well, the money you pay to your mortgage bank doesn't get taxed as income to the bank, right now, therefore Cain won't tax it either, really doesn't have any support. Cain's entire justification for how he can lower the tax rates, and still collect the money, relies on his claim that he's going to tax things, a lot of things, that aren't taxed now.

That's why all I'm really focusing on is the fact, which the candidate himself continues to support, that his tax plan will signify a large increase in the taxes paid on the cost of labor. I assume (admittedly without support) that all or most of these other things that his one-sentence description says will be taxed, actually won't be.)

You mean the ones that are, and have been, readily available on Cain's website? Just like they were last week, and the week before?

Quote them.

Quote me the one that says that the landlord who collects rent won't have to pay corporate income tax on that income.

(Yes, I'm well aware that under Cain's plan, as described, if the landlord spends some of the rent money on, say, buying a new refrigerator for the apartment, then that money is deductible, and therefore that money doesn't get taxed. OTOH, I'm also aware that the amount of money that the landlord spends actually purchasing things for the apartment is a very small portion of where the rent money goes. No, a real-world landlord, operating under the rules Cain has posted, won't pay corporate income tax on

all

of the rent money. Just on the rent money that he doesn't spend at Home Depot.)

And the one that says that the money paid to the bank, for mortgages, isn't "gross income" for the bank.

Show me the part I'm ignorant of.

Funny. I posted a link to a study, which included a link to Cain's web site in my first post. (OK, I forgot to make the link clickable, and added it later.)

I've quoted the exact lines from Cain's web site which say exactly what I'm talking about.

You, OTOH, have been yelling "ignorant" for a week, and after a week, you deign to post the link I gave you. (And to ignore the fact that nowhere on there does it in any way say the things you're claiming.)

Quote it.

By the way, I can't believe that I'm once again finding myself in the position of mounting an all-out defense of a plan that puts me on the fence, this time not because I hadn't had enough time to consider how it would affect the economy, but rather because I think the hidden 9 will be the death of this plan. And yet I find myself sounding like I might as well be Herman Cain himself because, once again, the attacks are so full of errors and mistakes peddled as absolute truths that merely applying basic reasoning and analysis puts me in the hardcore Cainiac category when compared to what I'm arguing against.

Your claims of being the helpless defender against lies and falsehoods might have more traction, if your argument didn't consist entirely of unsupported slogans and insults, arguing against someone who is actually quoting the plan, providing examples, and doing the math.

This honestly makes me think that you haven't even read the plan that you're so vehemently against that you're willing to completely abandon your very best personal characteristics for the sake of your argument.

You keep making that claim.

While ignoring the places where I've quoted the plan.

And while making piles of assumptions which you have not even attempted to support, other than through volume of insults.

The sales tax doesn't apply when one American business makes purchases from another. This has been part of the 9-9-9 plan from day one. Your assumption ignores an alternate possibility: That Cain simply wants to make American businesses more competitive. Does that amount to a 9% tariff? Yes. Do I, a staunch libertarian, have a problem with that? No, because I think the "stock" libertarian stance on international trade is, to put it kindly, underwhelming. Free trade is only a good thing under certain circumstances. These circumstances do not currently exist with many of our trade partners. China is the worst offender, but there are others, including Japan. Without those circumstances, completely free trade is a bad idea, and tariffs actually make sense. (Yes, I realize that the de facto 9% tariff would apply to all imports. Ideally, I'd like our "good" free trade partners to get exemptions. But that's a relatively minor part of the entire plan.)

1) I agree with you. I assume (just as you do, completely without support) that sales tax will not apply to sales between businesses.

2) OTOH, yet again. Notice how a "clean, simple, plan, with no exemptions or loopholes or deductions, for anybody" keeps growing exceptions?

3) What does that do to the "compliance costs will be zero, because there won't be any exceptions or loopholes" slogan?

4) And, this exception, also opens up a big, gaping, hole, for people to cheat.

The "It's for my business" cheat.

Example: Right now, here in Florida, as I've explained, sales tax is only supposed to apply when an item is sold for the final time, to a retail purchaser.

When I buy a computer from my wholesaler, there's no sales tax. When I sell the computer to a customer, then it gets taxed.

What happens when I buy a computer, for me to use, personally, in the store?

Under the law, I'm required to pay sales tax on that computer. The only sales that are exempt from sales tax are items which are purchased for the purpose of being resold.

There were a few items (I can only think of one, off the top of my head) where we literally purchased the item from our competitor, down the street.

He was a kind-of competitor. We sold computers and printers and things, and serviced them. He was more of a Radio Shack type store. He sold capacitors and resisters and wire and things. We sent customers to each other all the time. But there was a tiny overlap of things that we both sold.

One of them was an adapter that allowed you to plug a 2.5" laptop hard drive, into the IDE cable of a desktop computer. It cost like $10, and my supplier didn't seem to sell it. We probably sold one every nine months, and it was just easier for us to buy it from the competitor down the street.

Because of that, we had the ability, when we bought that item from him, to tell him "there's no tax on this", and to give him our tax ID number. (He had the paperwork on file.)

But if I bought solder from him, then I had to pay tax. Because we used solder in the service department. We didn't sell solder.

Now, one of my customers was a big insurance company. We serviced their computers and their printers. They needed a lot of printer service, because they insisted on buying "re-manufactured" toner cartridges from Office Depot. (And the re-manufactured toner cartridges suck, and they leak, and they damage the printer. And then they'd have to pay us big money for an onsite service call.) (Which was perfectly fine with us, because, frankly, we didn't make any money selling genuine HP toner cartridges, we sold them at cost. But we made big bucks on labor.)

Anybody here honestly think that that insurance company paid sales tax on those Office Depot toner cartridges?

Or did Office Depot use the "it's for my business" line, and thus avoid the sales tax, even though they were, in fact, the final purchaser of that item?

Now, Cain comes along, and wants to impose an additional 9% sales tax on everything.

But, businesses will have a "tax free" card they can use, that makes the tax go away.

Anybody think businesses won't use that card on things that they aren't actually selling?

Think Bob the Plumber won't use his card to get 9% off the cost of the computer he's buying for his kid?

How about the car he buys?

And oh, have I mentioned the effect that every business will have to keep records on every thing that they sell, so they can account for whether they did or didn't collect sales tax, and why they didn't collect it, and who they sold it to, has on the "compliance costs will be zero, because there are no exceptions" mantra?

The tax was never supposed to be on everything, a fact I've repeatedly pointed out to you and a fact that's readily available on his site. Go ahead, read it:

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

It won't bite. I promise.

Go ahead, quote it.

It's not there. I promise.

You're right, I forgot two important factors. First, despite the fact that Cain has said roughly 7,396 times that used goods are exempt from the national sales tax, we have to pretend that every single thing you'll ever buy is actually subject to the national sales tax.

Actually, we have to pretend that the thing he said when he revised his plan, was always there, and we have to pretend that taxing everything except used cars and used real estate is some vast (I believe the term you emphasized was "giant") exemption.

So, just to be clear, your position is that the hidden 9% payroll tax is essentially paid by the employee when it's time for you to complain about how Cain's plan screws workers, but that very same hidden payroll tax is paid for by businesses when it's time for you to complain about how this is going to raise costs for businesses. Right?

Which part of "it doesn't matter who you pretend pays this tax, it's still an increase on somebody" is too tough to grasp?

Oh, I don't know, income taxes?

Tell ya what.

Show me the business, right now, where the business pays more money in corporate income taxes, than 9% of the total amount paid for all of it's labor.

In fact, make up some hypothetical numbers from a hypothetical business, where corporate income tax on the business's profits is bigger than 9% of what the business pays for labor.

In fact, since your claim I asked you to support was:

Um... raising the cost of labor by 2.25% while drastically reducing the taxes that businesses pay and the cost of complying with those taxes? Yes, for the same reason that I would think that raising the capital gains tax by 2% while eliminating the income tax would cause prices to go down. We're talking about a tiny jump in one cost versus a giant reduction in other costs. They're not even comparable.

Please shoe me the business where corporate income tax, right now, is "drastically" lower than 9% of what the business spends on labor.

[Destino]

You worry too much Larry. The people getting a tax increase can earn themselves a cut by admitting they aren't worthy of new items. I'm waiting for him to include "no sales tax on cake".

[Larry]

You worry too much Larry. The people getting a tax increase can earn themselves a cut by admitting they aren't worthy of new items. I'm waiting for him to include "no sales tax on cake".

Well, but that only gets them a break on one of the tax increases.

To get a break on the payroll tax increase, they also have to live in an economically blighted area, that has school vouchers, bans gay marriage, doesn't allow abortions, and doesn't receive an NPR station.

[AsburySkinsFan]

Cain is making proposals that are angering the unions, so we like Cain, because he love stuff that pisses off the unions.

That's all the article needed to say.

[Jeeb]

That's all the article needed to say.

Chugging bleach would really piss off the liberals

[Larry]

I keep remembering once reading part of a Dilbert book, in a bookstore. The part I read was "The Great Lies of Management".

One of them was "You'll make more under the new plan".

To which the author's response was: Do you really believe that this company is going to go through all of the work and the changes and the paperwork and the meetings and the arguments and the implementation and the mistakes and the corrections and the adjustments, so that they can pay their employees more?

Wouldn't raises be ever so much simpler?