Would you vote for jmfcst's tweak of Cain's 999 plan

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Short version:  

IRS is dead, no need to file any kind of individual federal tax return (unless you have investment income)....investments are taxed as same as income, but even income below poverty line is taxed, there are no exemptions and no deductions...corporate tax is identical to Cain's...9% VAT excludes rent, food, and used clothing so that the poor don't have to pay VAT for basic necessities, and thus makes the jmfcst version of 999 PROGRESSIVE

Long version:

9% absolutely flat income tax - no deductions, no exemptions, includes all income from salary or investments...if you only earn a single dollar, you will be taxed 9% of that dollar
9% flat corporate tax - (exactly same as corporate tax in Cain's plan - Likely Voter and I have already defined it and are in agreement as to what it is)  
9% VAT - food, used clothing, and rent on family dwellings are exempted

if you only make $20k/year:  
   you would pay $1.8k (9% flat income tax)...
   your employer pays $1.8k (9% flat corporate tax), since wages are NOT deductable
   you would pay 9% on anything other than rent, food, or used clothing...
      so, if you're poor and want an XBox, you will pay 9% VAT tax on that XBOX.

if your salary is $200k/year:  
   you would pay $18k (9% flat income tax)...
   your employer pays $18k (9% flat corporate tax), since wages are NOT deductable
   you would pay 9% on anything other than rent, food, or used clothing      
      you want that new car, you're going to pay 9% VAT on it.

if your salary is $200k/year and you make an addition $1.8M in investment income, for total of $2M income:  
   you would pay $180k (9% flat income tax)...
   your employer pays $18k (9% flat corporate tax), since wages are NOT deductable
   you would pay 9% on anything other than rent, food, or used clothing      
      you want that new car, you're going to pay 9% VAT on it.

if your salary is $200k/year and you make an addition $1.8M in bonuses, for total of $2M income:  
   you would pay $180k (9% flat income tax)...
   your employer pays $180k (9% flat corporate tax), since wages are NOT deductable
   you would pay 9% on anything other than rent, food, or used clothing      
      you want that new car, you're going to pay 9% VAT on it.


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late edit:  math was wrong on last two examples involving $2M total income

[Swing low, sweet chariot. Comin' for to carry me home.]

so, here is how it breaks down for individuals (remember income includes salary PLUS investments):

those who rent and only buy bare necessities, regardless of income level, pay ~9.1% (9% income tax, plus small amount of 9% VAT on the very few necessary items that are not exempted from VAT: toothbrush, soap, toilet paper, etc)

those who own and spend all their income on non-necessities pay close to 18%

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Obviously no.  Why jmfcst?

because I'm announcing a run for POTUS on the Feast of Halloween, and my foreign policy will seek and destroy evil men, like yourself, who beset the path of the righteous man on all sides by the inequities of the selfish and the tyranny. Blessed will be he who, in the name of charity and good will, shepherds the weak through the valley of the darkness, for he is truly his brotha's keeper and the finder of lost children. And I will command the military forces of the United States to strike down upon thee with great vengeance and furious anger those who attempt to poison and destroy my brothas.  And you will know I am the POTUS when I lay my vengeance upon you, and so the announcement of my candidacy will mean your arse.

[Swing low, sweet chariot. Comin' for to carry me home.]

No, because it is regressive for starters, assuming that it otherwise pencils. Just how regressive depends on what proportion of the corporate income tax that is canned percolates down into higher prices (probably less than half these days).  This particular Pubbie believes in progressive taxation. I should indeed pay more rate-wise than Joe Six Pack ... just not as much as opebo wants me to pay (at least until he gets his inheritance, and then we shall see ).

you'll need to give me an example, based on my version of 999, of how it is regressive.

[Swing low, sweet chariot. Comin' for to carry me home.]

What's the drug jmfcst? 

pulp

[Swing low, sweet chariot. Comin' for to carry me home.]

The rich save more jmfcst. The VAT tax on food is particularly execrable.

so, you're a lawyer who can't read?!  I exempted rents on family dwelling, food, and used clothing from the VAT...and I am replacing that loss of tax revenue by taxing all income including investment income

[Swing low, sweet chariot. Comin' for to carry me home.]

Oh my bad. I missed the negative component in your sentence I guess. Sorry.  Anyway, your plan is still regressive because the rich save more.

 

I've given numerical examples, which you obviously didnt read, and it is NOT regressive in any realistically conceivable case.

[Swing low, sweet chariot. Comin' for to carry me home.]

I should institute a poll tax:  you have to pay the price of actually reading the proposal before voting on it.

now I see why nothing changes:  people are unwilling to read a couple of short paragraphs before deciding against change.

[Swing low, sweet chariot. Comin' for to carry me home.]

yo, the Nazis moved this thread to the Jewish ghetto

[Swing low, sweet chariot. Comin' for to carry me home.]

so 2 different types of VATs?

no, only one VAT in this plan

[Swing low, sweet chariot. Comin' for to carry me home.]

Maybe.  The current federal budget seems to be larger than the amount that this would generate.  Do you have a good estimate of the total amount of revenue that this would bring in 2011, or in 2010?  My wild guess is just over $1.5B, which is not enough to sustain our current programs, but I could be way off.  Bottom line is that I will support a flat tax if it draws enough revenue to avoid deficit spending.  

I think Cain's 999 was scored at about $200B less revenue per year than the current tax code, but Cain's plan didn't tax income from investments, mine does.  Cain's plan also had a poverty line threshold before the 9% income tax kicks in, and I've removed that.  And Cain allowed deductions for charity - I also removed those, thus making the income tax portion absolutely flat with no deductions.

...So, I have expanded the reach of the 9% income tax in order to provide for exemptions to the 9% VAT for absolute bare necessities (food, rent, and used clothing).  Also, Cain's VAT exempted used items, mine doesnt (except for clothing).

So, I don’t know the net revenue of my changes, but I would think my 999 version would bring in more tax revenue than Cain’s…since I now my only exemptions are for bare necessities.  I would assume this creates a bell shape curve which is progressive up until the point an individual starts to spend less than they make.  

So, my changes taxes all sources of income at the same rate 9% rate, and the 9% VAT portion applies only to discretionary spending….so basically income is taxed at 9% and discretionary spending is taxed at 9%...the frugal don’t pay the VAT, those who want to enjoy luxury (new clothes, TV, XBox) do pay the VAT

My version of 999 would increase my (jmfcst) tax burden on the income side since it now taxes investment income and doesn’t allow for deductions…and I think a good estimate of my plan's revenue would be:


    GDP * 9% (GDP = income, so income tax from all sources of income would be 9% of GDP)
+  (GDP – investment income) * 9%
+  (GDP – nation grocery food bill – rent for family housing) * 9%

So, I would think it would come to between 20 and 23 percent of GDP

[Swing low, sweet chariot. Comin' for to carry me home.]

so 2 different types of VATs?

no, only one VAT in this plan

but you said your corporate tax is the same as Cain's, and Cain's is a VAT.

Cain's sales tax is a VAT, and since corporations pay the VAT when they buy goods, the corporate tax portion of the plan allows credits for VAT so that the customer only pays the VAT once - unlike a sales tax that can be rolled into the final product multiple times.

so, his corporate tax isn't a VAT, it just allows companies credits for the VAT they paid to buy the materials to make their finished goods

[Swing low, sweet chariot. Comin' for to carry me home.]

First, as has been pointed out the percent of a family's budget used to consume goes way up as income goes down, so people who can least afford to pay the sales tax are hit hardest.

apples and oranges - my plan exempts the bare necessities:  food, rent, and used clothing...but if someone who is poor wants an XBox, then they're going to pay the full 9% VAT…but if you are poor and frugal, you can avoid paying VAT almost entirely by buying only exempted items.

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 Second, as Michelle Bachmann suggested, it institutes a new tax, and if the past is any guide to the future, then we can expect that tax to increase over time.  Eventually you can imagine paying a 20% sales tax in addition to income taxes.

1)   yes, it institutes a new tax, but it gets rid of Social Security taxes
2)   Congress already can raise existing taxes
3)   With a VAT tax, if Congress raises it, they raise tax on everyone, therefore the political cost for increase the VAT becomes much higher…it ends class warfare, so if they can’t divide us, they are much less likely to conquer us.

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If we lose the national sales tax, and decrease the corporate tax in order to encourage job creation, and increase the national flat income tax proportionately to make it up, I'd be on board.  Maybe something like

income:  flat 17% for everyone
corporate:  flat 5%
sales:  none

That would still generate 3 billion or so, and you'd have an easier time selling it to both parties in congress.  

1)   the VAT encourages savings
2)   your flat 17% income tax is not politically viable because it basically doubles the tax on the poor as compared to my plan