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Peter Schiff exposes the Achilles heel of Herman Cain's 999 plan

Be sure to read my youtube video description below, as I'm not certain if Schiff's critique is entirely justified
http://www.youtube.com/watch?v=Nqtv2amDPWg

Schiff's bottom line: under Cain's 999 plan, the 15% payroll tax is NOT eliminated but is instead replaced with an effective 9% payroll tax b/c businesses can no longer deduct employee wages from their own tax burden. Because this 9% falls entirely on the employer, where will he get the money to pay for this tax? By reducing employee wages by 9%. Schiff says Cain's plan should therefore be called the 18-9-9 plan: 18% (9% income + 9% effective payroll) + 9% sales tax + 9% business tax. I have presented his view in the youtube graphic.

Though I'm a huge Ron Paul supporter and don't have 9 cents, 9 shits, or 9 rats asses worth of trust in Herman Cain, I'm not entirely sure Schiff's critique is accurate. For instance, Schiff says the employer would be taxed 9% on the wages of the employee, and instead of taking that 9% on the chin the employer will simply reduce his employee wages (I assume by 9%). But aren't employers ALREADY are paying half the employee 15.3% FICA burden, meaning they already are paying 7.65%? 9% would raise the employer burden by only 1.35%. So perhaps the employer would be tempted to reduce employee wages by 1.35%. However, wouldn't the elimination of FICA taxes that the employer himself currently has to pay more than offset that 1.35%? Don't people who are self employed have to pay 15.3% of their own income to FICA? I don't know know enough the 999 plan to say, but wouldn't that 15.3% burden be reduced to either 0% or 9%, a net gain of at least 6.3% for employer that would offset the 1.35% increase he'd pay on employee payroll tax? I don't ask this to defend Cain (I don't always post videos that I'm certain I agree with, but I still find interesting), but want to have an honest discussion - if someone spewed BS about Ron Paul for instance, the misinfo deserves to be corrected. And I've read the Fairtax book that discusses how only the final good would be taxed and gets rid of embedded taxes that are added up along production stages, so that the bottom line price wouldn't really change. A superficial look at Cain's website says that he intends to adopt the same methodology. So would the poor really have their tax burden increased 3% like Peter says? I don't know the answers to all these questions, so feel free to post your own comments or links to articles that discuss this stuff



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The biggest achilles heel of

The biggest achilles heel of Cain's 9-9-9 plan is that it enslaves us with an entirely new tax, a federal sales tax, on top of the federal income tax. Keeping both. The promise to cap rates at 9 percent is completely meaningless. There is nothing preventing future Congress from increasing the rates at any time or expanding the tax code. Even if the 9% rate is fixed into the code, future Congress can change the code at will at any time.

After all when the 16th Amendment was implemented, its advocates assured people the the tax rate could never go above 7 percent and even that would only be on the top less than 1 percent of the richest people and the overwhelming majority of americans would never see the income tax at all. How did that work out?

My favorite stimulus and economic recovery plan is to eliminate the income tax entirely and repeal the 16th Amendment. Then eliminate all foreign welfare, all foreign occupations, the Department of Education, Department of Energy, and a number of other governmental agencies.

A tax on income is a tax on prosperity and a tax on progress. "The income tax is the biggest single intrusion suffered by the American people. It forces every worker to be a bookkeeper, to open his records to the government, to explain his expenses, to fear conviction for a harmless accounting error. Compliance wastes billions of dollars. It penalizes savings and creates an enormous drag on the U.S. economy. It is incompatible with a free society, and we aren’t libertarians if wetolerate it." - Harry Browne

Griffin, G. Edward- [I]f we were to cut out the waste, subsidies, foreign giveaways, transfer programs, interest on the national debt, transfusions into the Monetary Fund, and support for the World Bank, plus the cost of running the IRS itself—the federal government could easily operate, as it was intended to do, on indirect taxes alone. - Before the Income Tax, THE NEW AMERICAN p. 29, April 1, 1996.

Moore, Stephen - [T]he income tax is incompatible with a free society. The IRS routinely intrudes on our basic civil liberties and privacy rights—and its intrusions are getting worse all the time. I want an America where it is no longer the government’s business how much money you make and what you do with it. - testimony before the U.S. House of Representatives Ways and Means Committee.

Chamberlin, W.H.(Historian) - One of the most insidious consequences of the present burden of personal income tax is that it strips many middle-class families of financial reserves. [It] has made the individual vastly more dependent on the State.

Let it not be said that we did nothing.-Ron Paul
Stand up for what you believe in, even if you stand alone.-Sophia Magdalena Scholl

Excellent AZJoe

Well thought out.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

When does a President create the tax laws?

I find it amusing when a candidate claims that they will do the job of Congress. Congress makes the tax laws; not the President. The President's job is to enforce the law, not make the laws. The President can write up a new bill, just like anybody else, and send it to Congress. It's Congress who decides it's fate. So, for Herman's tax plan to go through, he would need a willing Congress. Congress is not going to change our confusing tax code.

People should be concerned with what a President can do, not what he fancies doing. As Commander-in-Chief, the president can bring the troops home. How does "9-9-9" fit into that plan?

"I support the Declaration of Independence and I interpret the Constitution."

So where does SSI go ?

Cain says he wants a Chilean style SS, where people are required to invest in government chosen set of stocks and Bonds. This will still come completely out of wages, not to mention the problem with having government favor certain investments.

Schiffs right - working class taxes go up under 999

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Cool

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