Occupy Wall Street – Are you with it?

[Steve Mercer]

So you don’t think the person who is investing is never going to pay tax on that investment?  What about when they retire and suddenly are reqiured to liquidate their positions in the market which you are requried to do currently. You don’t think they are going to pay 9% of a much bigger number? You are just taking a snap shot of a single year.  You have to look at the entire forrest not just one tree Heather.

s.

[Heather Smith]

If you can explain to me why it is a good idea to tax someone making $20,000 a year 22%…go for it.

This person will never have money to invest or save…so I guess they should be thanking their lucky stars they will never have to pay 9% of what? $100,000? What would that leave them $91,000 to live on? How about 9% of $1,000,000…$90,000…oh they will only have $910,000…you’re right…it is so fair. Lets get really crazy! 1,000,000,000…that only leaves them 90 million!!! GASP! You’re right…I’m not being fair I am only looking at the income tax they would pay…not the sales tax they would pay on luxury vehicles and private jets. Somehow that “tree” that person…you’re right…I can’t see beyond the fact that a person making $20,000 a year would be taxed at a higher rate then the neighborhood billionaire. And I am sure that billionaire will need to liquidate ALL of his money at once.

Here is the funny thing, you initially said the person making $20,000 would be better off under Cain’s plan…but yeah…now you know…that isn’t true. So you have to say there is a greater good to the millionaire getting a tax cut while the poor and middle class get a tax increase.

[Steve Mercer]

I was not referring to Cain.  I was referring to his PLAN. His plan proposes to scrap our current tax code and replace it with his 999 plan.  You may not agree with the details but it is a clean break from our current convoluted tax code.  I am sure it would piss off a lot of CPA firms and H&R Blocks who exact their annual fees from us taxpayers.  I am amazed that democrats who read my comments only selectively pick out words here and there to make their point.  True to their Parties traditions I guess.

 

s.

[Heather Smith]

You are referring to Cain’s plan…that is what we are talking about right? 9-9-9? I think you are just bothered that I took the time to crunch the numbers myself, something you didn’t bother to do yourself or you would have known what he is saying about his plan is untrue. You want a tax increase on the poor…to piss off CPA firms? I suppose you are a big fan of his three page limit on bills as well? Everything should be simple! Life isn’t simple. The complexities of our economy are not simple. People are not simple. I am sitting here baffled by your inability to admit you didn’t understand how Cain’s plan would effect the poor and middle class. But way to stick to your guns. Good night.

[Jason T. Radice]

I have yet to see the complete details of the 999 plan, but anything has to be better then the system we currently have. Even the Fed chairman, the former chair of the taxation comittee in the House, who actually WRITE the tax code can’t even understand the current system. It is indecypherable, which is why so many high profile people are caught with improper accounting. And there are way too many loopholes. Add in the billions businesses and individuals pay every year for tax professional to ensure compliance and pay the least amount possible in taxes is a real drag in the economy.

 

Your math example is too simplistic and bit misleading, as there are likely to be exemptions for the sales tax portion, just as there is already with established food, and you are including a sales tax in one calc and not the other. You also don’t add 9% and 9% and get 18%. It doesn’t work that way. Sales taxes allow personal choice in payment, as you have the option not to purchase something expensive and pay the sales tax on that vs. something less expensive and not as heavily taxed. There will also likely be some kind of income or family size dedution to make the sales tax less regressive (there is more than one type of “flat tax” system).

The total federal payroll (FICA) tax is upwards of 15.3%. Keep in mind, the employee pays about half of that tax personally out of their paycheck, but the employer also pays the same amount (SSI, medicare/caid) and it is taken out the the salary offered to the employee, just as medical benefits are and vacation are. If you look at the total compensation package offered to an employee, add in unemployment and state taxes, and it is about 1/3rd more than the take-home pay offered. The theory is that the total tax burden placed on employer will drop such that prices will drop, more workers can be hired and salaries will increase (from the savings in the employer-side payroll tax elimination) and the dollar will become worth more. The tax code will be simplified so there will not be exemptions such that EVERY business will pay taxes…NO LOOPHOLES. Also, because of the reduced tax rate, more business will repatriate their assets and their businesses, bringing in yet more money to the national treasury, and employing more Americans. The US currently has the highest corporate taxes in the world, which is why businesses hire accountants to find every loophole they can, and why companies like GE and Google have so many overseas assets and subsidiaries. FICA is also a regressive tax rate, meaning that the more you make over $106,800, the less of a percentage of your income you pay. Income over that number is not taxable under the current FICA setup, but under a flat tax, it would be, so the wealthy will contribute more to the system. The more you make, the more you pay. The more you buy, the more you pay. Sales taxes also encourage personal savings, of which Americans traditionally are horrible at.  

 

Then come to miscellaneous “fees” and taxes. All told, the average worker pays closer to 35% to 50% of their income in taxes and fees.So much of it is hidden that it is hard to actually calculate without saving every receipt and bill. It will be interesting to see the details of all the candidate’s plans and see which one would be best when they get the details worked out.

[Heather Smith]

He doesn’t have details…I used the same calculations economists are using to estimate what the changes would cost individuals. He also does not exempt food from sales tax. You can run the numbers yourself. We have our own business and so I do know how payroll works…I was not confused by that. What I am going to continue coming back to is…what is this going to do to the middle class and poor? Using his own numbers the tax rate is still higher for the poor and middle class…even he has begun to admit this during interviews.

You are correct that I don’t count a national sales tax in the existing scenario…because it doesn’t exist. I am comparing what we have now with what he is proposing. Yes…with his proposal this person would pay 15% sales tax. I also did not add 9 and 9…I took 9% from the total and then as I wrote to simplify took 15% from the rest. It is the best estimate we can get and considering it appears everything would be available for sales tax…probably not too far off.

Perhaps it isn’t my math that is simplistic…perhaps it is Herman Cains proposal that is simplistic. Isn’t that what people love about it? So that they can do their taxes at home in five minutes? He says employers will pass on the money they save from payroll tax to their employees…wow…really? Can he promise that? No. Of course not…nor would he want to. So an employee could be fortunate to work for a good boss or a greedy one that pockets the saved cash as profits.(But that wouldn’t be greedy would it…that would be capitalism) Even your comment…the more you buy the more you pay? If you make $20,000 you are being taxed on every cent…when you make $500,000…that is not true…you are rewarded for being rich and punished for being poor. Because of course if you are a millionaire you could tuck away $500,000 and not be taxed on it…

• It ends nearly all deductions and special interest favors. 
• It ends all payroll taxes. 
• It ends the death tax. 
• It eliminates the double taxation of dividends. 
• It eliminates the taxation of capital gains and repatriated profits. 
• It allows immediate expensing of business investments. 
• It shifts the burden of taxation from production to consumption. 
• It increases capital formation, which will fuel productivity and wage growth.

And that is the “good” from Freedom Works (http://www.freedomworks.org/blog/dean-clancy/herman-cains-999-plan-…)…note the part shifting the burden from production to consumption. Who does that hurt? There seems to be an assumption that the “fees” you mention and other taxes will disappear…which of course they won’t. There will still be state and property taxes…of course there will be.

It is not taxes that are keeping employers from hiring…it is that the middle class is no longer able to purchase products or services at the rate they were. Raising taxes on the middle class makes absolutely no sense and economists say this could indeed increase unemployment. Does that make sense to charge people MORE money for spending in an economy that sorely needs consumer spending? So the poor person buys one new pair of pants instead of two…how is that good for the economy? Do you want to pay a sales tax for visiting your doctor? I guess it doesn’t matter if you are wealthy…but damn if the poor and middle class aren’t suffering enough without charging them MORE. He doesn’t blink when people point out how high tax would be for the poor and middle class, “He acknowledged that ‘if you combine it together, yes, you would get that number,” but when pressed on whether state taxes would be repealed, Cain responded that they “have nothing to do with replacing the tax code.'” (http://www.businessweek.com/news/2011-10-14/cain-s-sales-tax-would-…)

You are so right Mr. Cain…so lets not consider at all what this would do to a poor family. Who cares if they can afford food…oh that is right..that isn’t exempt either. That is what the poor get for even wanting to eat!  The funniest part of this all is now we have conservatives approving a tax hike on themselves all in the name of simplifying the tax code! Yay! Good job guys!

[Heather Smith]

I’m tired…I don’t know why I am even arguing about this…Cain will not be the nominee. Good night…for real.

I do realize one mistake I made…for the individual making $20,000…if he has a family and maybe if he doesn’t…I am too tired to check…he would actually not have payroll tax. It could be taken out but he would get a return back. So the current scenario means he is paying less then 13%. That is all.

[Jason T. Radice]

 

Again, we do not know what will be exempted or not. There will be exemptions (not deductions), as there always are with flat tax systems. It is also very easy to put in exemptions (you make less than ‘x’, no 9% income tax), without loopholes and ‘earned income tax credit.’ The point is to keep it simple. One interesting thing e-tailers are concerned with is that this will do away with the ‘Amazon Exemption” that states have been trying to pass so they collect the state’s (and now the feds) sales taxes, just like brick-and-mortar stores do. It levels that playing field a bit. The full plan has not been published, and may include things such as empowerment zones or personal qualifications. The concept is out, but not the details. You, me, or any other economist cannot fairly judge it or score the plan as shown. Assumptions won’t work on this. Remember, economists are just as political as lawyers and lobbyists. You can trust them as far as you can throw them, and they will “create” statistics to back up any argument. I’ve heard just as many econs in favor of this as against, and it is transparently based on their political leanings or which think tank pays them.

 

I’m certainly not saying it’s the answer, but it is different, and has piqued my curiosity and warrants investigation, not immediate dismissal. Either way, it will be a lot simpler for compliance and much more difficult to evade. Flat tax structures seem to be working very well in Eastern Europe and South America..and with low income exemptions.

 

Just like now, state sales taxes have nothing to do with this…this is FED taxes, the states can constitutionally do whatever they want. I moved from 8.25% state and county sales taxes in NY to 5% (now 6%) Maryland, with trips occasionally to 0% Delaware. It is up to the states to set their own sales taxes as they see fit…it promotes competition and choice. Note the mass migrations out of high-taxed states in favor to states where the tax burden is lower? The same thing is happening with businesses moving overseas. As a small business owner, you would surely welcome a tax break your larger competitor is eligible for that you aren’t, would you not? The flat tax (not just 999) means that large company pays the same tax rate you do, no exemption from paid lobbyists and conflict-of-interest politicians, it removes that advantage.

[mauiBob]

Cain is a politician or wanna be from the GOP. Of course, he’s looking out for the wealthy first. Republicans divide their party two ways: they use tax cuts, financial matters to gather votes from the wealthy donors; then use gun ownership, religion issues, abortion, gay rights, social issues to gather votes from the middle and lower class Republicans.

Anyone who thinks Republicans don’t cater to the wealthy in society needs to have their heads examined! Period. They’ve got their heads so far in the sand and can’t see daylight or listen to logic. I hope there are 10 million people along Wall street and disrupts business as usual.

As for Cain. Puhlease! He is this month’s GOP flavor. The party is clueless on who to nominate against Obama. There is NO way the GOP will ever nominate a black man for President to represent their party. None. Nada. Ziltch. Its not being racist, but a reality check. This is he same party who has yet to accept Obama was born in Hawaii and not Kenya. Cain is just a decoy at the moment, because the Tea baggers can’t fully endorse Romney. Cain got the idea of the of his tax plan when delivery of a $9.99 pizza one night. Even FauxNews said the plan favors the millionaires. Once the skeletons come out of Cain’s closet, its lights out on his short Presidential ride.

 

[Rob Halpern]

This article is an interesting take on the present situation:

 

http://www.businessinsider.com/what-wall-street-protesters-are-so-angry-about-2011-10?op=1

 

[Steve Mercer]

Those guys certainly do a better job of explaining the situation than the protesters do!

 

s.

[Leslie B Wagle]

In some ways, but I noticed no mention of how immigration, new technology, and globalization have hurt employment….and how would we make banks loan out money faster if businesses aren’t ready to expand and hire?

[William M. Davenport]

The economy as it is, college costs, insecurity, and other maladies are the objectives of the people who are sponsoring these protests.  And the regard these sponsors have for our intelligence is illustrated by their belief that we’re too stupid to notice that they’re protesting the very things for which they’ve been working for the past 33 months.   

[Heather Smith]

The thing is the banks are not making loans to small businesses that could grow. We had to get a loan from my mom for a dump trailer for our business, I know a hair stylist in town that tried to get a $5000 loan and my brother in law is starting his own construction business in W. Washington and can’t even get a loan for a business truck. I read…I think on Forbes someone saying that small businesses didn’t want to expand…that is why money wasn’t being used by the banks to loan as was intended. That is BS. Mark Foster and I had a conversation about this several months ago…they are not small business friendly.

[Jordan Lockman]

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