At first blush, almost any plan looks better than the jumble of rules, regulations and loopholes of our current tax code. Unfortunately, the proof is in the pudding, as they say, and when you run Herman Cain’s plan in various scenarios, it just doesn’t work. In order for a plan to be truly effective, it needs to be run in every scenario possible, with positive results. This ‘plan’ is especially ineffective in most scenarios and actually INCREASES taxes for most Americans and many businesses. EX. http://www.washingtonpost.com/blogs/fact-checker/post/herman-cains-misleading-pitch-for-the-999-plan/2011/10/12/gIQAHszPgL_blog.html
Cain’s plan makes no distinction between profits and revenues for a business…so, if a company has revenue during the year, but still has a loss (which many businesses do for their first few years), they STILL have to pay the Sales Tax 9% AND the Corporate tax 9%, for a total of 18%…even though they show a loss!! How do you think THAT will fare with business owners? I’m one of them and I would NOT be happy!
9-9-9 May Be A Good Price for A Pizza...But It Doesn't Work for A Tax Overhaul!
Also…right now, everything a company invests in its business is tax-deductible, including worker salaries…not so under the Cain plan. The figures show that companies (especially small companies) will pay more under Cain’s plan than current. For instance, if a company has capital expenses now, they’re deductible. Under Cain, they’re deductible ONLY if the purchases are for products made in America! Sounds really good until you realize that we are a world economy today and that there are no (or very few) semiconductors or integrated circuits (and other computer parts) that are made in America. Without those deductions, MOST companies would go bankrupt, being unable to deduct their product & inventory (cost of goods) purchases…they just couldn’t get by without the deduction, and then add 18% tax on top of that (corporate income 9% and sales tax 9%). EXAMPLE: if a company wants to buy 500 Apple computers because of expansion, would they be deductible because they are being purchased from an American company? Herman Cain’s answer to that very question is, “Ahhh…I don’t know!” LOL. “I DON’T KNOW????” Mr. Cain, you wrote the plan…if you don’t know, who does?
Sorry, on a purely financial analysis, Cain’s 9-9-9 plan is untenable and will drive businesses into bankruptcy and lose more American jobs than you can imagine! If someone out there has a different analysis, I’d love to see it. BTW…if a Democrat had proposed this plan, the right-wing would be up in arms against the “anti-business” socialist who wants to destroy business in America!
As another aside: Cain’s preference for American goods only, would be a direct violation of the many international trade agreements that we have signed over the decades. Sure, we could say, screw the agreements…BUT, then, America would not be able to sell our products overseas…then what!?? Sometimes, what seems so simple is just that…simple…too simple and impractical.
Rich Lowrie - economics advisor to Cain - has no economics degree or experience! He's a Wells Fargo financial planner!
Life…and economics…is more complicated than that. THAT’S the problem with Cain’s economic advisor…he has none! The only adviser Cain has been willing to mention by name —Rich Lowrie – is a wealth manager for a division of Wells Fargo, and according to his LinkedIn page, holds an accountancy degree from Case Western Reserve University. Lowrie also spent three (3) years on the advisory board of the conservative third-party group Americans For Prosperity. Not totally surprising is that the 9-9-9 plan that Lowrie came up with was actually co-opted the tax system from the Sims videogame!! I think Mr. Lowrie (AND Mr. Cain) are operating a little out of their league! But, I’ll leave that for you to decide.