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tazzygirl -> RE: 999? (10/13/2011 4:12:55 PM)
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Im rather surprised that most arent jumping on the "end the earned income credit " bandwagon....
Right now, nearly half of taxpayers don’t pay income taxes, but they do pay their share of payroll taxes, which amounts to 7.65 percent of wage income (though much of it is capped at $107,000). Cain would also eliminate the earned-income tax credit, which is intended to lift working Americans out of poverty. Many of these workers currently receive tax refunds.
On top of that, Cain would introduce the new sales tax, which would affect lower and moderate-income people who spend most of their income on purchases, not savings and investments. Depending on how you do the math, people now paying zero or negative taxes might be faced with a 27 percent tax on income.
In other words, while on paper Cain is promising a tax cut, in reality tens of millions of lower-income Americans would face tax increases. People in high tax brackets — 28 percent and higher — would likely see big tax cuts. (As part of his plan, Cain would also eliminate estate taxes and capital gains taxes, which, again, mostly affect higher-income people with stock and real estate investments.)
Cain, in his television appearances, glosses over such details. “The fact that we are taking out embedded taxes that are built into all of the goods and services in this country, prices will not go up,” he asserted on MSNBC. “They will not go up.” He then gave an example of a family of four earning $50,000.
“Today, under the current system, they will pay over $10,000 in taxes assuming standard deductions and standard exemptions. I've gone through the math, $10,000. Now, with 9-9-9, they're going to pay that 9 percent personal — that 9 percent tax on their income. So that's only $4,500. They still have $5,500 left over to apply to this sales tax piece. …They are still going to have money left over.”
We’re not sure how Cain calculates that this family now pays $10,000 in taxes, but the reliable Tax Foundation calculator comes up with a much more reasonable figure: a total tax bill of $3,515 — $690 in federal income taxes and $2,825 in payroll taxes. (The family gets a big income-tax savings from the child tax credit, which Cain would eliminate.)
So, in other words, under Cain’s plan, this family would instantly pay $1,000 more in income taxes. They would also pay additional sales taxes, probably more than $3,000, on their purchases. It’s unclear how the business tax would affect the family’s tax bill but it appears this theoretical family would get no tax cut but instead a 100 percent tax increase.
Just seems too bottom heavy... and his math is off from the start
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