Thursday, October 27, 2011

Will you pay more under Cain's 9-9-9 flat tax plan?





In the recent CNN/GOP debate, Rick Santorum stated that Herman Cain's 9-9-9 plan would raise taxes on 84% of Americans.  After the CNN debate, one of the news analysts agreed that from their number crunching, this could be true.  I asked one of my intelligent math wiz friends to do his own analysis, and this was his response:


By Brian Larson:
As far as I can tell...right now...Looks like the states with no income tax and high sales tax will end up losing with the 9-9-9. Also the people with High income tax and low sales tax really dont lose anything they just end up saving more money than spending it. In turn, hurting the recovery of the economy. This is all real general though. I think to get a real analysis you would really need to do this for every tax bracket and state to get an over all comparison to how it would effect the nation as a whole. So thats my partial analysis.

It sounded like a great idea at the start but looking into it further I think it does more harm then good for the economy. HOWEVER, in the states with high income taxes it actually increases employment. This is due to the cost of labor is now cheaper. So if companies can find ways to cut capital spending, then more jobs would be created. Granted the Government gives some sort of incentive to higher these new workers to keep production levels high enough to cover the wages. So it really is a mix of how the consumers will end up and how corporations will end up. Personally, I think that the corporations will end up winning in his 9-9-9 plan. What's new right! LOL! So there you have it. My ASU degree might come in handy sooner than I thought!

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