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SVreX
SVreX SuperDork
11/11/11 1:35 p.m.
DILYSI Dave wrote:
Otto Maddox wrote: In reply to DILYSI Dave: Well, the math for his tax plan doesn't work. Perhaps he has never taken a pencil to his own tax plan. Perhaps he is lying about his tax plan. Perhaps he is bad at basic math. I am not sure any of these are great answers for a presidential candidate. Cain told us he even worked out the math himself. Someone earning $50,000 a year would pay less in taxes under his 9-9-9 than they do under the current system, he said. Under the current system, a person who earns $50,000 a year "pays about $10,000 in taxes," Cain said. "A big part of that is the payroll tax." Cain then walked us through his 9-9-9 plan and said the same person would "still have $2,000 left over." Ok, so we are down to he is a liar or bad at math. You guys can take your pick. Maybe the line of CPAs saying his math is wrong are just a bunch of dirty whores looking for money and attention.
I was curious, so I whipped out the old Excel. I get the same $2k that he does when I run those numbers (actually $1900, but I'm cool with rounding), so I guess I'm also bad at math. Bachelors in Mechanical Engineer, Masters in Business FWIW.

What did you base your calculations on? The only reason I haven't commented is that it appears to me there was no where near enough information in the original statement to be able to calculate anything at all.

I have had an income near $50K at times. I never paid $10K in taxes based on it. In fact, for some people (depending on your marital status and number of dependents), those numbers would qualify for the earned income tax credit (owing zero, and getting money from the govn).

What does he mean "payroll tax"? I am not aware of a payroll tax for individuals. Businesses, yes. What people call "payroll tax" is income tax (or SS, or unemployment tax, or medicare, etc.), withheld from their paychecks.

I'd love to hear more because frankly, I want to agree with you. But it seems to me that there are an awful lot of assumptions being completely left out of the discussion.

DILYSI Dave
DILYSI Dave SuperDork
11/11/11 1:55 p.m.
SVreX wrote: What did you base your calculations on? The only reason I haven't commented is that it appears to me there was no where near enough information in the original statement to be able to calculate anything at all. I have had an income near $50K at times. I never paid $10K in taxes based on it. In fact, for some people (depending on your marital status and number of dependents), those numbers would qualify for the earned income tax credit (owing zero, and getting money from the govn). What does he mean "payroll tax"? I am not aware of a payroll tax for individuals. Businesses, yes. What people call "payroll tax" is income tax (or SS, or unemployment tax, or medicare, etc.), withheld from their paychecks. I'd love to hear more because frankly, I want to agree with you. But it seems to me that there are an awful lot of assumptions being completely left out of the discussion.

Agreed - too many assumptions to be considered any kind of analysis, but here's what I came up with based on that which was stated:

Current
Income $50,000.00
Tax $10,000.00 (stated in the quote)
Disposable Income $40,000.00
Spending $40,000.00
Sales Tax $0
Total Spending $40,000.00
Net $0

9-9-9
Income $50,000.00
Tax $4,500.00 (9% of $50k)
Disposable Income $45,500.00
Spending $40,000.00
Sales Tax $3,600.00 (9% of $40k)
Total Spending $43,600.00
Net $1,900.00

Tax liability under this hypothetical was $10,000 under the current system, versus $8,100 under 9-9-9. I am doubtful of the $10k liability that was given, but Otto was critical of math, not of givens. My effort was only to show that the math was sound.

Cone_Junky
Cone_Junky HalfDork
11/11/11 2:03 p.m.

Too bad there is an assumption of 0% state tax. 9-17-9 doesn't sound too appealing to me.

DILYSI Dave
DILYSI Dave SuperDork
11/11/11 2:10 p.m.
Cone_Junky wrote: Too bad there is an assumption of 0% state tax. 9-17-9 doesn't sound too appealing to me.

This was a comparison of federal versus federal. The state tax doesn't change either way.

Snowdoggie
Snowdoggie Dork
11/11/11 2:25 p.m.
DILYSI Dave wrote:
Cone_Junky wrote: Too bad there is an assumption of 0% state tax. 9-17-9 doesn't sound too appealing to me.
This was a comparison of federal versus federal. The state tax doesn't change either way.

That's Herman's apples to oranges reference.

Of course if you spend less and save more under this plan your taxes go down. But aren't we trying to get people to spend more in order to stimulate the economy, not spend less.

DILYSI Dave
DILYSI Dave SuperDork
11/11/11 2:36 p.m.
Snowdoggie wrote:
DILYSI Dave wrote:
Cone_Junky wrote: Too bad there is an assumption of 0% state tax. 9-17-9 doesn't sound too appealing to me.
This was a comparison of federal versus federal. The state tax doesn't change either way.
That's Herman's apples to oranges reference. Of course if you spend less and save more under this plan your taxes go down. But aren't we trying to get people to spend more in order to stimulate the economy, not spend less.

It's not apples to oranges, as the state tax is a fixed variable. Nevertheless, here it is with your 7% state sales tax thrown in. Now 9-9-9 looks even better. By including state tax in the Spending column above, I was taxing it. By breaking it out, we're only taxing the part that was spent on a good/service, not that which was spent on the state tax. That's where the difference come into play.

Current
Income $50,000.00
Tax $10,000.00 (stated in the quote)
Disposable Income $40,000.00
Spending $37383.17
7% State Sales Tax $2616.83
Federal Sales Tax $0
Total Spending $40,000.00
Net $0

9-9-9
Income $50,000.00
Tax $4,500.00 (9% of $50k)
Disposable Income $45,500.00
Spending $37383.17
7% State Sales Tax $2616.83
9% Federal Sales Tax $3364.49
Total Spending $43364.49
Net $2135.51

I kept spending level as a fixed variable, because we were looking for the left over amount from Otto's statement. But yeah - most people will just spend the extra $2k, and yeah - that will be good for the economy.

EDIT - Dammit Tom. If the next version of this forum still has this berkeleyed up formatting I'm driving down to florida and using a berkeleying magic eraser on a high speed grinder to remove your tatoos. Smooches. :)

oldsaw
oldsaw SuperDork
11/11/11 2:38 p.m.

Not sure if Cain ever made any reference to state taxes in 9-9-9. Perhaps you could provide a link.

It's apparent the plan's goal is to entice more business participation in the economy. Corporations are sitting on a few trillion dollars because they make more keeping it where it is. Provide a vehicle that offers a more profitable ROI and those trillions go back into circulation very quickly.

Curmudgeon
Curmudgeon SuperDork
11/11/11 4:42 p.m.
SVreX wrote:
93EXCivic wrote:
Curmudgeon wrote: But the Supreme Court has already ruled that campaign contributions are considered to be protected speech. And if some goober has, say, $10 million of his own money to invest and his (more worthy) opponent has, say, $100k which one is more likely to get elected?
Time for an amendment then.
I agree, but it has nothing to do with Herman Cain, nor this election cycle. It's not possible for this to happen before the next election. Therefore, it is a flounder to this thread.

It will NEVER happen, therefore this subject will ALWAYS be a flounder to ANY thread. Even though it is very much the root of the problems our country faces.

Cain talks about 9-9-9 like he can snap his fingers and make it happen. It won't. Thus, arguing its 'merits' makes it more of a smokescreen, meaning he's just like every other politician out there.

SVreX
SVreX SuperDork
11/11/11 5:02 p.m.
DILYSI Dave wrote: I am doubtful of the $10k liability that was given, but Otto was critical of math, not of givens. My effort was only to show that the math was sound.

Excellent. Thanks for the clarification.

SVreX
SVreX SuperDork
11/11/11 5:07 p.m.
Curmudgeon wrote: Cain talks about 9-9-9 like he can snap his fingers and make it happen. It won't. Thus, arguing its 'merits' makes it more of a smokescreen, meaning he's just like every other politician out there.

I hope you didn't hear me argue the merits of 9-9-9.

I am not a Cain fan, but I do respect that he offered a plan. Any plan. Don't think much of the merits of the particular plan he offered, but I do respect his willingness to lead and offer a plan.

I think his politics might not have been too wise. Offering a plan (especially one with questionable merits) gave his opponents plenty of material with which to shred him.

As far as I'm concerned, he gets leadership points for offering a plan, but gets leadership points deducted for the timing and presentation of his plan. Net wash.

Curmudgeon
Curmudgeon SuperDork
11/11/11 5:38 p.m.

I guess I'm just too jaded from all my previous experiences with politicians.

Otto Maddox
Otto Maddox Dork
11/14/11 8:48 a.m.

Sorry, had a three day weekend of family time so I haven't had time to respond.

SS/MC taxes (7.65%) on $50,000 would be $3,825.
Average income tax on an income of $50,000 for a family of four after deductions and credits is $766.
Total tax under the current system is $4,591.

Otto Maddox
Otto Maddox Dork
11/16/11 2:00 p.m.

Cain says something I agree with, but I can't imagine it will be popular with the Republican base -

At a campaign stop in Urbandale, Iowa, Tuesday, Republican presidential candidate Herman Cain said he supports letting states establish their own laws regarding medical marijuana.

ddavidv
ddavidv SuperDork
11/16/11 5:20 p.m.

Screw the Republican 'base'. Does anyone really think they'll vote for Obama over someone they simply have to hold their nose over? The country is center-right; why can't we just elect someone that is center-right already?

DILYSI Dave
DILYSI Dave SuperDork
11/17/11 7:29 a.m.
Otto Maddox wrote: Cain says something I agree with, but I can't imagine it will be popular with the Republican base - At a campaign stop in Urbandale, Iowa, Tuesday, Republican presidential candidate Herman Cain said he supports letting states establish their own laws regarding medical marijuana.

Bring it on. I don't see why most republicans would not agree, between 1. individual liberty and 2. states rights. Yeah, you'll get a few old foggie bible thumpers who are freaked out because of reefer fever, but they are insignificant anyway.

DILYSI Dave
DILYSI Dave SuperDork
11/17/11 7:46 a.m.
Otto Maddox wrote: Sorry, had a three day weekend of family time so I haven't had time to respond. SS/MC taxes (7.65%) on $50,000 would be $3,825. Average income tax on an income of $50,000 for a family of four after deductions and credits is $766. Total tax under the current system is $4,591.

Thanks. That does seem like a more reasonable number than the $10k in the original quote. I would assume that the numbers utilized in a proper 9-9-9 analysis uses a higher base wage, via the additional wages by eliminating SS/MC tax, but I didn't want to bring that in given that it wasn't mentioned in the original quote.

For S&G, let's give it a shot.

9-9-9
Base Income $50,000
Added income via elimination of employer SS/MC contribution = $3,825
New Income = $53,825
9% Income Tax $4,844.25 (9% of $53,825)
Disposable Income $48,981
9% Federal Sales Tax $4,408
Total Goods/Services Spending $44,573

Vs. your numbers for current:

Income $50,000
Total tax $4,591
Total Goods / Services Spending $45,409

So it looks like under 9-9-9 this $50k scenario has disposable income decrease by $836, or about 1.8%. Not a huge swing, but a swing none the less.

Otto Maddox
Otto Maddox Dork
11/17/11 8:51 a.m.

In reply to DILYSI Dave:

My understanding is that under Cain's plan, businesses pay 9% of gross income less all purchases from other U.S. located businesses, all capital investment, and net exports. It doesn't look like you get a deduction for paying employees. So, presumably the employee would be paid 91% of the gross new income of $53,825, or $48,981. That swings you $4,844 in the other direction.

However, there has been some implication that Cain intends for the plan to exempt a poverty level amount of income. If that is the case, I would guess the hypothetical family above would get a deduction of $15-$16K. At 9% tax, that removes somewhere around $1,400.

I might be missing something else, but it sure looks to me that the family above would pay more tax under Cain.

DILYSI Dave
DILYSI Dave SuperDork
11/17/11 9:22 a.m.

I think what we can conclude for sure is that there aren't enough details to be able to conclude anything for sure.

Regardless, I am glad that he brought a tax reform discussion to the table. Nobody was talking about that prior to him.

Otto Maddox
Otto Maddox Dork
11/17/11 9:42 a.m.

In reply to DILYSI Dave:

I think it also shows how hard it is to make a "simple" tax plan.

DILYSI Dave
DILYSI Dave SuperDork
11/17/11 9:44 a.m.

agreed.

ppddppdd
ppddppdd Reader
11/17/11 10:07 a.m.
ddavidv wrote: Screw the Republican 'base'. Does anyone really think they'll vote for Obama over someone they simply have to hold their nose over? The country is center-right; why can't we just elect someone that is center-right already?

Republicans argue that we're more right-of-center than what we are. Democrats argue that we're more left of center. Probably 80% of the people I know voted for Obama last time. Hell, my republican governor is probably left of the national center. My America is left of center.

The center is center. Obama is positioned probably just right of center, which is how you win. Party loyalist sheep vote for you regardless of what you do, so you're free to cross that middle line in your politics. He wouldn't have won if he were a liberal. For every valid criticism leveled at him from the right, there's a valid one from the left.

The wonks planning these campaigns don't care about the positions their candidates take. They're buried in statistical analysis and market reports. They're after those center voters (though left/right is way too simplistic for them). They know EXACTLY where the center is and America is an easy mark. They position themselves in the center, find a few sneaky issues to steal the other guy's votes, and call each other names for a year. The end.

This is a multi-billion dollar industry. It's a fight between two gigantic organizations competing for their share of corporate money. They will not put a mildly unpredictable yahoo who has trouble remembering monumental front page world events from three weeks ago at the center of it unless something really really really weird happens.

And that tax plan is a smoke screen. Maybe a simplified tax code would be nice, but as a core issue? Hey America, look over here! Don't look at this mess we're in, look at this! I'm going to make it so you don't have to do so much paperwork! Say what? It lowers taxes? Especially on the rich? Well how 'bout that! Everybody wins! Oh, except for the deficit. We can kick that can down the road for the next guy.

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