Thursday, October 20, 2011

Please Explain Herman Cain

I am not a tax expert.  In fact, because I don't own a home and currently only have 2 children (though it will spring to 5 in  a few months) I end up with the standard deduction every time.  That very reason is what I believe truly separates the rich from the poor.  The ability to claim deductions.  I'd never understood why we would tax the wealthy more until recently.  The wealthy have CPAs do their taxes, not TurboTax or H&R Block.  They get every fraudulent deduction possible so they don't have to pay the full amount.  Whereas with poor people, most of the time they are paying out the max and getting the standard deduction.  Or in the case of normal home owning Americans, they get the minimal deductions because they don't have the money to spend on a CPA and the amount of crap to tinker with.

So that leads me to believe, a flat tax without deductions would make more sense.  Again, pure speculation.  I was trying to understand Herman Cain's 999 triple flat tax deal.  There would be a 9.1% income tax with no deductions (maybe one for kids but I think it's only charitable donations), a 9.1% employer tax (so it would affect businesses, not individuals right?), and a 9.1% federal sales tax.  I'm leaving the income alone because it made sense and the employer tax is already being paid, so no sweat.  If I'm wrong, please help me understand these.

I've heard people arguing that the poor pay a higher percentage of their income on new products/services so they would be adversely affected because there would be a tax they never had on all of it.  I heard him say that they would start buying used more often to compensate.  That's just kinda rude, but fine, I'll work with that.  Does that mean there will still be a state/city/county tax on everything too?  That'll get excessive really quickly.

But what about Alcohol, Tobacco, Printed Materials (Newspapers, Books and Magazines) and Gasoline?  Don't those have different taxes than the rest?  I thought gas had a built in tax.  Would that go down?  And if that's the case, would the gas companies just take advantage of the sudden drop and raise it back up to where everyone was used to paying to make a bigger profit?  I know alcohol had a higher tax, like 20% versus the state/city tax on food back when I was bartending.  I assumed part of that was a federal tax.  Again, would it go down?  Tobacco is also part of that whole Sin Tax crap.  Would the tax on cigarettes go down?  Again helping the tobacco company regain customers who didn't quit because of health but for cost.  If they begin taxing Newspapers, won't that just tank a dying industry?

It all just seems to have a bunch of negatives when I thought it sounded like the ideal solution.  Please break it down for me if you can.

After I published it I started thinking about other businesses that would be affected.  New homes and new cars.  Would home builders start renting the houses for a month prior to selling to avoid the sales tax?  Cars probably won't feel much more of a crunch seeing that they're already suffering, but like newspapers, it seems they'd be tanked by this action too.

2 comments:

  1. I haven't been paying attention to Cain, but it looks like it's time to check in.

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  2. Okay. Was this post based on Cain's first 999 plan...or the revised one? Honestly, the debate about this got so loud on my local news station that I switched over to my CD with the soundtrack from Wicked. I'll have to deal with Cain later.

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