Why Herman Cains 999 Tax Plan Raises Taxes on Most Americans

Herman Cains 999 Plan. Why You Should Be Outraged

Herman Cains 999 plan is meant to simplify the tax code. Lord knows our tax is in serious need of reform. The premise is to have a 9% Corporate tax rate, a 9% Federal income tax, and a 9% Federal sales consumption tax. Ideas like this sound good on the surface. But...

I can quickly debunk this plan for you. This plan is actually a rather sizeable tax increase on the poor and a moderate to large tax increase on many in the middle class.

First Lies about Tax Rate (and why you need to stop being so gullable)

Whenever people talk to us about tax rate we are given the wrong percentages. Always!

The following are the misquoted percentages.

Single Filing Status

•10% on income between $0 and $8,350 
•15% on the income between $8,350 and $33,950; plus $835 
•25% on the income between $33,950 and $82,250; plus $4,675 
•28% on the income between $82,250 and $171,550; plus $16,750 
•33% on the income between $171,550 and $372,950; plus $41,754 
•35% on the income over $372,950; plus $108,216

Married Filing Jointly or Qualifying Widow(er) Filing Status

	
•10% on the income between $0 and $16,700 
•15% on the income between $16,700 and $67,900; plus $1,670 
•25% on the income between $67,900 and $137,050; plus $9,350 
•28% on the income between $137,050 and $208,850; plus $26,637.50 
•33% on the income between $208,850 and $372,950; plus $46,741.50 
•35% on the income over $372,950; plus $100,894.50

For instance, someone making $50,000 a year is quoted as being in the 25% tax bracket. But this is actually not the truth at all. The are actually in the 15% tax bracket.

When Herman Cain says a family at the poverty line ($22,350) is going to see a slight tax decrease in their taxes then the man is either very clueless or he is telling a tale that would make Pinnochio blush.

When economists like Art Laffer, and tax reduction zealot Grover Norquist say the Cain 999 plan is "tax neutral" to the existing tax code they are knowingly lying!

All it takes to debunk this is a quick look at the 1040A Tax Form and the Tax Tables!

The Proof is in the Tax Forms We All Have to Fill Out (Including Warren Buffet and the Top 1%)

First let's start with a family of four who makes $50,000 a year. We are going to keep this as simple as can be.

A family of 4 making $50,000 only pays federal income tax on $24,000 of their income. How? Simple, and you already know the answer if you do your own taxes.

 50,000   Gross Income
(11,400)  Standard Deduction
(14,600)  Personal Exemption
 ------
 24,000   Taxable Income

Here is why you need to be outraged when people tell you that someone who earns $50,000 a year is in the 25% tax bracket. Someone that has a family of four is actually only paying 5.5% in Federal income tax ($2766). 5.5% is a lot less than 25%. That is a pretty sizeable difference. Imagine your reaction if you were quoted a price for some labor and the final bill was 4-1/2 times more than the quoted price. I am guessing you would just write the check with a big old smile on your face.

Why no one in the media (left, center, or right) ever wants to point this out just boggles my mind. Are most Americans that ignorant on tax matters?

PS - Though many of you already are thinking this I will say it out loud. I was being conservative in the numbers. I did not include the child tax credit, nor did I include the reduction in gross income for people putting money into a 401k or 403b retirement plan, or other deductions for that matter.

The Liars Trying to Deceive Us

At this point you might be saying that the Cain plan still looks like a good deal as the effective tax rate is now 9%. But remeber their is a 9% Federal consumption tax. Assuming the family of four is only going to see this tax on $25,000 of their income. This is a very, very conservative number for someone with that income and four mouths to feed and clothe. Let's now look at their new tax liability.

 (4,500)  9% flat tax
 (2,250)  9% consumption tax on $25,000
 ------
 (6,750)

Why liars like Laffer and Norquist call the Cain plan tax neutral is that if you go into the tax tables you will find that someone making $50,000 (taxable gross) pays $6,666 or 13.3% of their income in Federal taxes. Under the Cain 999 plan they would be paying $6750 or 13.5%. I have already showed you that a family of four making $50,000 only pay $2766 in Federal income tax, or 5.5%. In reality under the Cain 999 plan their taxes go up 7.8%. Putting it another way, they would have $332 less per month in income. That is a significant amount of money for someone in that income bracket.

You can run the numbers for yourself by downloading the following excel spreadsheet How Cains 999 Works for My Family

Full disclosure. I am in what would be considered an upper middle class tax bracket (in excess of $150,000 a year). When I calculated the 999 plan for my family income we would actually be getting a 2% decrease in taxes. Trust me and run the numbers for your income. Unless you are wealthy, or upper middle class and file the long form with a lot of deductions you would be seeing a tax increase. Which brings us to the next point.

Now That We Screwed Most of the Middle Class Let's Screw the Poor

The current poverty rate is defined as... $10,890 for a single individual, or $22,350 for a family (2 or more)

People at these income levels or below do not pay any Federal income tax. We can debate that issue, but this is not the forum to do so. Frankly, if you think a family of four making $22,350 a year needs to pay more in taxes I would suggest you take a good look at yourself in the mirror.

Under Cains 999 plan the taxes for the working poor would go up conservatively by at least 15%.

A Message From God Concerning the 999 Plan

If you are not a Christian this message is not intended for you as you are not a follower or believer in Christ and his teaching (Though I personally know many of you that believe in the truth about what I am about to quote). Below is intended for my Christian friends, neighbors, family, and fellow citizens, that like I, claim to be a Christian. Since you claim to be a follower of him then I would like to refer you to some scripture.

Matthew 25
34 “Then the King will say to those on his right, ‘Come, you who are blessed by my Father; 
take your inheritance, the kingdom prepared for you since the creation of the world. 
35 For I was hungry and you gave me something to eat, I was thirsty and you gave me something to 
drink, I was a stranger and you invited me in, 
36 I needed clothes and you clothed me, I was sick and you looked after me, I was in prison 
and you came to visit me.’ 
37 “Then the righteous will answer him, ‘Lord, when did we see you hungry and feed you, 
or thirsty and give you something to drink? 
38 When did we see you a stranger and invite you in, or needing clothes and clothe you? 
39 When did we see you sick or in prison and go to visit you?’ 
40 “The King will reply, ‘Truly I tell you, whatever you did for one of the least of these 
brothers and sisters of mine, you did for me.’

I know many believers and non-believers that understand and practice the scripture I just quoted. But, sadly many of you have been co-opted and represent a loyal voting block for a political party who is overtly on a mission to further oppress the poor and downtrodden. I am not asking you to switch parties. If you truly believe the clear words of your Lord and Savior and sit idly by in either ignorance and/or non-action as the party you align yourself with continues to oppress those less fortunate than youself, then you are living in sin. Not only are you living in sin.

I cannot tell you how troubling it is for me to know that Cain is a Baptist Minister and would offer a tax plan that devastates the poor like the 999 plan does.

Final Summation

Very few Americans are in the tax bracket that is represents their true gross income. Billionare Warren Buffet did not release his entire tax return, but he did release the following information:

 $62,855,038	Gross Income
($23,040,254)	Itemized Deductions 
 ------
 $39,814,784 	Taxable Income

This works out to Warren paying 11% of the taxable income or $6,923,494 in federal income tax. Whether this is fair or not is a debate for a different time. It was illustrated here to make my point that very few folks end up in their quoted tax bracket. This is especially true for the wealthy. The point I wish to make is that the Cain plan would further reduce taxes for Corporations and for the wealthy. As I told you earlier, I am not wealthy, but in an income bracket where I would see a small increase under his plan.

As another note, even the liberal media reported his federal tax percentage as 17.4% because they divided what he paid in income with his adjusted gross of $39,814,784. Actually, his real income was $62,855,038.

We are in the beginning of a national (actually international) movement that have been coined the 99%'ers. As I have studied this movement thus far it seems to be about fairness. When we do tax cuts the larger percentages have gone to those who have the most. The general idea is that these folks are the job creators and that these cuts will trickle down and benefit the rest of us. But, we have enough historical data to know that this was not the case with the Bush tax cuts. In fact, we can go back to the Reagan era and see that the trickle down theory really has not panned out.

What we need is fairness in our tax system. To some degree we have that today. People at the poverty level pay less in Federal income tax than those in the middle class. It is only until we get to the ultra wealthy or to the largest multi-national corporations that we start to see the fairness go away.

The common man may not understand that the socialist bailout of companies on Wall Street and Banks deemed too big to fail, and to GM were a necessity so that it did not put us over the cliff and into a worse scenario than we are currently facing. But most of us know that they did get a bailout and we did not. We also hear reports every quarter of private business posting record profits, while our unemployment rate remains flat and high at 9.1%. Most of us that are not blinded by political party affiliation and a media that mostly reports distorted truths and lies to us, understand that until special interest money is removed from Washington that we will never have a government for "We the People".

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